PERSPECTIVE ON THE PERUVIAN MILITARY - PART II
Locker, Michael
The 1962-63 Military Junta During the year of its reign, the new military junta in Peru unilaterally enacted some basic reforms that in developed societies have usually been instituted by the...
...9 At the same time, the IPC decided to spend $40 million over the next five years for development...
...1), p. 12, 49 Marcel Niedergang...
...In an attempt to contain the popular demand for social justice which simultaneously it not only acknowledges hut in fact assumes as its own base of legitimacy, it may well have liberated more energy than it can encompass with its programs or repress with its counter-insurgency paraphernalia...
...interests, violently protested the regime's new policy...
...46 Medium-sized holdings (10-100 hectares) represent 5.2 percent of the total area and only 2.9 percent of the total landholdings...
...policy vis-a-vis Peru remained the same old IPC dispute, but now Belaunde needed upper class support which took its cues from the United States...
...Nevertheless, their isolation mounted when the rest of the left suffered repression and they failed to expand...
...In addition, many of the major banks from metropolitan centers maintain branch offices in Lima tl.e., First National City, Royal Bank of Canada, the Bank of London in South America, the Bank of Tokyo, and the Bank of America...
...The third largest, Banco Internacional, is controlled by Chemical Bank New York Trust Co...
...bank loans, ormally totalling $150 million, nave been snarply cut since the IPC expropriation arguments began...
...The mining, fishing and fishmeal industries, the railway system, the plantations on the coast and in the Sierra, the import-export trade, and the automobile assembly plants are all directly or indirectly controlled by foreign capital, as are the country's utilities and telecommunications...
...With such huge expenses and debts to finance, foreign business interests were able to exercise leverage for constructing a "favorable investment climate...
...1 DOCUMENT: PENTAGON-FINANCED RESEARCH AT FOREIGN UNIVERSITIES...
...According to one statement of a high ranking Cerro official, the firm was interested in having around the smelting plant a proletarianized mass which would assure a permanent labor supply for working the mines and handling the mineral in the refineries...
...Alarmed, the State Department made it known that all foreign assistance would be terminated if the dispute was settled without mutual agreement...
...The U.S...
...FOREIGN DEBT (In US$ millions) Debt Total Year balance service Amortizations Interest 1955 229.1 - - 1956 213.8 29.7 25.0 4.7 1957 204.2 27.8 22.7 5.1 1958 254.6 27.2 21.8 5.4 1959 221.1 28.3 22.1 6.2 1960 267.8 56.2 49.1 7.1 1961 291.1 38.7 32.6 6.1 1962 500.5 43,1 36.7 6.4 1983 517.0 41.9 32.4 9.5 1964 644.6 50.3 35.9 14.4 1965 712.0 68.5 46.7 21.8 Total - 411.7 325.0 86.7 fOURCE8: Study made by PEL, based upon the World Bank study published in "Le commerce et le developement economlque" United Nations, 1985, that in- cludes statistics up until 1962...
...Thus, they reated static security zones out of the belief that the progressive bourgeoisie would shield the guerrillas from extreme military repression...
...Great Britain and PFrance American investors includ- W.R...
...Frustrated with the civilians' failure at reform -- a failure they made possible through their support of Belaunde -- and fully aware of the popular sentiments surrounding the IPC affair, the armed forces, led by the Army's Commander-in-Chief, General Velasco, overturned the government in a bloodless coup...
...35 For more on the MIR, the ELN and the guerrilla struggle of 1965-66, see Pumaruna...
...4, the major mining projects affected are listed...
...IPC claimed it never made such an arrangement and the original signed contract was "lost...
...In 1957, the Company had acquired a 50 percent interest and operating control in an adjacent concession (owned by Britain's Burmah Oil) that constituted the country's only other major oil operation, thereby gaining near monopoly control over the entire industry...
...In a political move to force the President's hand, Congress passed a law in July, 1967, specifically confiscating La Brea y Parinas and directing the executive to establish a "regime most consistent with the national interest...
...Grace Co., Ralston Purina (which recently sold its plant to International Proteins of New York but kept its poultry teed operations), Henry Heinz, Phillips Brothers, and the Atlantic Development Group for Latin America (ADELA...
...40 Goodwin, p. 43...
...Belaunde, on the other hand, was advocating agrarian reform -- supposedly one of the Alliance goals...
...The government hesitated between the brutally repressive massacres of previous governments and their reformist electoral platform of peasant betterment...
...Grace Co., Ford, Chrysler, and Anaconda were planning large new investments in their Peruvian operations...
...to aid in the transformation of a large portion of the lower class, must be confronted...
...28 For a history of the IPC case, see Richard N. Goodwin, "Letter from Peru," New Yorker (May 17, 1969) and the Subcommittee on Western Hemisphere Affairs, Senate Committee on Foreign Relations, United States Relations with Peru (Washington, D.C., Government Printing Office, 1969...
...Copyright ) 1969 by the North American Congress on Latin America, Inc...
...50 Moreover, to ease that pressure, the government instituted an austerity program which drastically reduced luxury imports...
...22 Commercialization changes the structure of the agricultural enterprises...
...C. R. Boettger ETRR *rn t rI r . 1&level Ilthe service charge required to finance this debt amounted to $65.8 million in 1965 and will increase to $170 million in 1970...
...Belaunde triumphantly ,went before Congress and the nation to announce the "agreement," but was vague about the details...
...Cerro then proceeded to buy up the land at low prices and installed filters on their smoke stacks which reduced the pollution levels to the point that the land was again usable...
...21 Larson and Bergman, p. 36...
...Scared by the terror that the up- surging popular masses produced, and pressured by the ultra-right, they initiated the massive repression in January, 1964, with the massacre of 17 peasants in Sicuani, in the Department of Cuzco...
...41 Since taking power in October, 1968, they have sought to implement a capitalist economic development strategy based on converting the landed upper class into an industrial national bourgeoisie...
...specific reforms included an extension of the minimum wage, crackdown on tax evaders and malfeasance in public office, food price regulations, electoral laws and the creation of a National Planning Institute...
...A brutal repression directed at the radical union leaders and more enthusiastic supporters isolated the militants and robbed Blanco's movement of momentum...
...and the Utah Construction and Mining Co...
...initial investments for such an expansion must come from foreign sources who move only when there is a favorable (i.e., profitable) investment climate...
...These progress reports contained the names of ER&E authors...
...Its upper class connections gave it the opportunity to successfully negotiate the refinancing of the national debt with a group of foreign banking firms, primarily U.S...
...business interests and their official embassy representatives supported APRA's candidate, Haya de la Torre...
...Lima...
...Cerro de Pasco, the Peruvian subsidiary of the U.S.-owned Cerro Corp...
...Forest or pasture holdings can go as high as 1,500 hectares or enough to graze 1,500 sheep...
...45 In an attempt to prevent the extinction of fish supplies, the new government has insisted on the right to regulate all fishing within 200 miles of the Peruvian shore...
...FIRST NATIONAL CITY BANK P A R T N E R IN P R 0 R E S S AR O U ND THE WOR LD Member Federal Deposit Insurance Corporation , AL 4rS W yOr The law attacks the twin evils of latifundio and minifundio...
...32 The SNA and provincial landowner associations spearheaded the drive for repression...
...all other land holdings will be paid for in 20 to 30 year bonds, (paying four to six percent annual interest...
...MIR was counting on galvanizing unity among the left and creating a coordinated national move- ment of resistance throughout the country...
...33 The large U.S...
...A major issue at stake was a guaranteed minimum price per barrel for the crude oil IPC would buy from a state-owned producer...
...In effect, the nationalization simply liquified their assets so they could transfer them to a more profitable industry -- tourism...
...Concentration increased foreign penetration to the point where 60 percent of fishmeal production is now controlled by external capital, much of it from the United States.-10Hence, this is just another case of a highly profitable industry generating surplus for metropolitan development rather than the satellite's upper class...
...32 Americo Pumaruna, "Peru: Revolution: Insurrection: uerrillas," Treason (Summer, 1967), p. 25...
...In economic terms, though, the Alliance really sought the diversification and increase of U.S...
...The industry's uncontrolled rapid development created a market vulnerable to overproduction and under supply, both of which made it easy for large firms to swallow up smaller operators in times of crisis...
...Box 57, Cathedral Station, N.Y., N.Y...
...With his dismissal in May, they were relatively helpless before the Generals' determination and popularity...
...Amounting to a kind of Latin Nasserism, Velasco's "revolution" is the work of professionals in search of a class...
...It had mistaken the peasants' petty bourgeois appetite for land for political comprehension of the historic tasks of the revolution...
...The political motivations for such a move were reinforced by financial difficulties resulting from economic stagnation and deficit spending...
...The fatal strategy of the MIR developed out of a mistaken analysis of Peruvian society, much of it left over from Aprista ideology...
...The more diversified landowners and affected U.S...
...When the personalismo of the regime's titular head (Gen...
...But most were forced to leave their plots en masse or pay rent in the form of work...
...For a significant portion of the middle sectors, the obvious failures of the new government, combined with the strategic and tactical success of fidelismo in Cuba, fostered the growth of revolutionary organizations...
...Haya, 623,501...
...This resulted in a sharp increase in prices that particularly affected the lower classes...
...Other left revolutionary groups criticized Blanco's reliance on "dual power" (in which the growing peasant movement would gradually displace the landlords and at the same time overwhelm all of the repressive forces which the government set against it) and the consequent lack of a military apparatus...
...There are provisions to encourage the development of small and medium-scale farms, establishing a minimum size of three hectares...
...Fifty percent of the MIR's leadership and three-fourths of its central committee were either jailed or killed...
...is the largest mining operation in the country, extracting copper, gold, silver and molybdenum...
...50 This strategy was revealed at a meeting in Santiago of the Latin American Economic Coordinating Commission and at a meeting in Lima of the United Nations Economic Commission for Latin America...
...37), "Seventy-eight percent of Sierra land is held in units of more than 1,000 hectares...
...Second-class postage paid at New York, N.Y...
...3. The external public debt balance rose $200 million during Belaunde's first two years in office and another $135 million by the end of 1968, raising the total more than three times its 1955 TABLE NO...
...In fact, the upper class united against the revolution and supported the military...
...The junta's development strategy assumes these programs will be paid for by expanding domestic surplus...
...Belaunde's economic and political problems were still acute, political attacks were mounting, and talk of a military golpe was in the air...
...Five years after Belaunde's campaign pledge to settle the matter in 90 days, negotiations were still dragging on...
...The upper class, in an attempt to force the military to over- throw Belaunde, greatly exaggerated the crisis, while the President, placed on the defensive, minimized the guerrilla's strength...
...3 PERU...
...De Mola resigned and charged the regime had conspired with IPC to defraud the Peruvian nation...
...During the 1963 election campaign, Belaunde publicly boasted that he would negotiate an IPC settlement within ninety days after taking office...
...44 Peru is the world's seventh largest copper mining country and second largest in Latin America (In 1968, Peru produced 227,000 tons as compared with Chile's 726,000 tons, generating $233 million...
...Agrarian reform was the other major volatile plank in PAP's 1963 platform...
...C. R. BOETTGER SENIOR STAF ADVISOR May 20, 1969 TO DIVISION HEADS As I believe all of you are aware, we have cut off the written transmission of our technical information to Peru...
...The PAP itself then began to split, leaving the military wondering whether the APRA-upper class coalition would capture the presidency in the 1969 election...
...Since it cost about $130 a ton to produce, manufacturers chose to stockpile the commodity, thereby denying the country a large source of foreign exchange.-1537 The New York Times, March 28, 1966...
...27 Both in the 1962 and 1963 presidential elections, U.S...
...In Washington, there was immediate talk of applying the punitive Hickenlooper amendment...
...The IPC nationalization was seen in this light as is the act which forces all national banks to be 75 percent Peruvian-owned...
...The movement reached new levels of success during the latter part of 1962 and the top officers were aware of the situation's incendiary nature...
...The plan is doomed to failure because, as we have seen, the most lucrative growth industries -- mining, fishmeal, manufacturing, etc...
...These industries now constitute the largest source of export revenue...
...From a national perspective, the military's reforms, while progressive, strengthen the position of the upper class and place left revolutionary parties on the defensive...
...Latin American law generally provides that subsoil resources are owned by the state and can only be exploited by private entities under concessions granted by the state...
...It took three months for the new Congress, controlled by an APRA-upper class coalition, to pass a resolution repealing the laws and settlements which had "legalized" IPC's subsoil claim...
...With APRA's support of the upper class position, the guerrillas were cut off from the most powerful sectors of the working class...
...It is rather a political hybrid spawned jointly by the social pressures of Peru's forced underdevelopment, the concomitant absence of a national bourgeoisie capable of taking charge of the economy, the failure of the Peruvian guerrilla movements, the general continent-wide collapse of the Alliance for Progress, the challenge of a self-modernizing socialist Cuba, and the embarrassment of U.S...
...I would appreciate if you would bring this to the attention of your technical staff and ask that they let you or me know of any similar incidents...
...government, intervening on behalf of U.S...
...Traditional enterprises, where the peasants pay for the right to use the land with a portion of their crop, are unable to compete with more modern capital enterprises utilizing wage labor...
...aid was cut but the sugar quota, worth about $42 million a year in hard currency, was maintained...
...Separate decrees nationalized all water rights and provide for technical assistance and credit...
...Prensa Latina was granted permission to operate in Lima...
...51 The government went so far as to place full-page ads in The New York Times (Jan...
...The large commercial holdings will not be broken up but turned into state-worker and then self-management cooperatives in order to raise their production, efficiency and worker participation...
...38 But the Alliance funds were abruptly cut back again in 1967 when Belaunde pacified the military with 16 French Mirage V supersonic jets costing more than $20 million...
...proponents of Kennedy's Alliance for Progress -- large manufacturing corporations pro- ducing and selling goods in Latin America as well as Social Democrats and New Deal functionaries supporting ex-radical anti-communist populist parties -- appeared to contradict their reformist goals since Haya was in close alliance with the status quo land-based upper class...
...51 From an international class perspective, the IPC nationalization (in effect, without compensation) substantially reduced surplus drainage to the metropolitan center...
...Grace Co...
...Chase Manhattan has a large investment in Banco Continental, the fourth largest bank and an important lender to the Peruvian government, The Israel Discount Bank has an interest in the seventh largest, Banco del Progreso...
...Unauthorized boats have recently been seized by the Peruvian Navy and compelled to pay heavy fines for their encroachment...
...Minimum contribution for 1-yr...
...Belaunde concentrated on reaching agreement with a few of the invaded Sierra landowners, including the U.S...
...III, No...
...The country's 1,200 biggest landowners representing 0.1 percent of the total landowners possess 11,653,000 hectares -- which constitutes 60 percent of the country's total cultivated land -- while 668,000 small holders who represent 83 percent of the total, own only 5,8 percent of the total cultivated area...
...The progressive bourgeoisie could be one of the strata allied to the revolutionary struggle against feudalism...
...In his October 3rd speech, he declared that there would be no return to constitutional rule until the power of the landed upper class was broken and the institutions they used to perpetuate their hegemony destroyed.-13Conclusion: Revolutionary Underdevelopment After more than one year of rule, the Peruvian military has carried out reforms to prevent a revolution flowing from underdevelopment...
...Such hints only drove the government closer to the upper class in search of a counterweight to military power...
...More importantly, they attempted to cast off their bourgeois urban characteristics in order to join with the lower classes in making a revolution...
...10-11...
...1950-1965" has been used, as well as statistics Included in the Reports of the Central Reserve Bank of Peru, which deal with the years 1964 and 1985...
...Their class support and programs were practically unchanged, but Belaunde's Partido Acci6n Popular (PAP) formed an important new alliance with the small ut influentiaTC-Ritian Democrats...
...If the banks should freeze credits, Peruvian industry would be paralyzed...
...The price of fishmeal, which in 1966 represented 27 percent of Peru's export earnings, dropped from $143 to $107 a ton in 1967...
...reprisals that would bring the economy to its knees...
...Peru currently produces 80 percent of the world's fishmeal exports, most of it going to West Germany, the Netherlands...
...In recent days we have had two requests from Peru that appear to be attempts to obtain Jersey information...
...pressure...
...Ed Starr has asked me to bring this to your attention in Earl Willauer's vacation absence...
...The second request was from an employee of the Peruvian Gvernment-owned Empresa Petrolata Fiscale Refineria la Pampila and was addressed to a Creole employee by name and by title...
...but the position of the conciliators could not be maintained for long...
...With respect to the following years data published in the Central Bank's "National Accounts of Peru...
...In general, the reforms sought to alleviate the most primitive forms of exploitation among the middle sectors and lower classes and to rationalize the economy around state planning...
...mines iron ore and operates two processing plants on the Coast...
...29 The Company produced about 64 percent of Peru's crude oil, refined 89 percent and distributes and markets practically all of the refined products, including 55 percent of the country's gasoline sales...
...In Table No...
...This all contributed to a 25 percent overall rise in food prices...
...In 1967 bi-elections (including one in Lima), it lost to APRA candidates and the Christian Democrats decided to sever their alliance...
...10025 October, 1969 I _ I-2proletariat...
...22 A few peasants fought to retain or acquire some land and to transform themselves into small entrepreneurs producing cash crops for the open market...
...The reform programs launched were expensive while revenues failed to mount accordingly...
...There is little reason to think things from now on will be different...
...But it has posed that problem in a new light with a heightened illumination of the stakes, the risks, and the imperatives of the situation...
...When the agreement was signed, the government chief negotiator, Loret de Mola, added an eleventh page stipulating the minimum price...
...It is possible that our people may be contacted in ways similar to the above...
...West Coast fishing interests insist on the right of free access, respecting only a 12 mile limit...
...On the first anniversary of the coup, President Velasco indicated that Peru's nationalist "revolution" will continue moving leftward...
...24 Hugo Blanco's Trotskyist organization also split at a crucial moment in the struggle...
...The pattern of cheap labor, low capitalization, and low productivity has persisted to the present, reinforcing the cycle of underdevelopment in the Sierra...
...The dispute, currently under discussion, vividly exemplifies the problems the new government will have in regulating foreign capital...
...In describing such infrastructure reforms as education, housing, commercialization of agriculture and the building of roads as "social revolution," the Alliance hoped to counter Cuba's success and the attraction of Fidelismo...
...Three percent of the landowners hold 83 percent of the land in the Sierra...
...From this entrenched position they threatened the government's entire reform program and extracted compromises that maintained agrarian reform at a token level...
...The United States objected to such unworthy expenditures (but offered to sell slightly cheaper F-5's...
...On July 28th [1968], Belaunde was scheduled to make his annual address to Congress on the State of the Republic, and it was inconceivable that he should appear without announcing some solution of the La Brea y Parinas problem...
...In the year prior to our cut-off, over forty progress reports were sent to Lima or Talara...
...According to The Wall Street Journal (Jan...
...The Southern Peru Copper Co...
...The bill provided for the expropriation of land whenever the Agrarian Reform Institute deemed it necessary, with payment to be made in 20-year bonds (paying five percent annual interest) and cash reinbursements to be given for cattle and equipment...
...After the IPC expropriation and fishing boat incidents, Washington again seriously considered applying the Hickenlooper amendment...
...The SNA tried desperately to forestall the act by spreading false rumors in the countryside and pressuring the government through an ally in the Cabinet, Agriculture Minister General Benavides...
...Most emerged from the ranks of either APRA Rebelde to form the Movimiento de Izquierda Revolucionaria (MIR) or from splits within the Communist Party that created the Ej6rcito Nacional de Liberaci6n (ELN...
...This, of course, made agrarian reform impossible and the bill was never passed...
...This was by a former International Petroleum employee who is still in Lima but who we believe is attempting to obtain our technical information for the Peruvian Government...
...Subscription price: $5 per year...
...30 and Sept...
...As these enterprises are turned into cooperatives, the workers will become "owners," eliminating the traditional boss and therefore, the union's bargaining power...
...The margination of the Sierra as a whole from the process of economic development on the Coast explains the persistence in the Sierra of an "archaic" social system...
...These reforms, most of which never reached the masses of Latin Americans, were meant, in actuality, to expand markets and increase production.In Peru, U.S...
...The Peruvian Finance Minister flew to Europe, the United States and Japan several times to raise new loans and encourage investment, but was politely rebuffed on many occasions...
...The keystone to his base of power, the military, were troubled by the absence of reforms...
...35 By the middle of 1966, the great wave of optimism greeting Belaunde's administration had evaporated...
...Puente and Hector Bejar, Apuntes Sobre tna Experiencia Guerrillero Peru (Havana, Casa de las Americas, 1969...
...The reforms affected such things as housing, roads and education...
...This, combined with a drop in the volume of traditional agricultural exports (cotton and sugar) and fishmeal prices, produced a sizeable negative balance of trade...
...In addition, the immediate need for social overhead investments (education, health, housing, roads, communications, etc...
...Twenty years ago, middle-sized holdings accounted for 27 percent of the total area...
...It therefore requires that boats apply for a license and adhere to specified quotas...
...25 It was not so liberal however with revolutionaries...
...39 The government's move to the right was also reflected in PAP's declining popularity at the polls...
...The relatively mild response of the United States objectified the international weakness of North American imperialism caused by the Vietnam war...
...37 Aid was actually restored after the State Department sent Walt Rostow to Lima to get a first-hand assurance from Belaunde that IPC would not be confiscated...
...It suffers from the contradiction that it cannot create the class, a modernized industrial bourgeoisie, which it pretends to serve, without at some point breaking its overarching bondage to international capital, a feat which could only be accomplished if it were willing to destroy its own inevitable elitist power structure in behalf of a self-organizing movement of popular revolution...
...Violent objections and some clashes with police led to its modification...
...Sierra haciendas produced wool, [hides], and meat, often for national and sometimes for international markets, but always at unfavorable terms of exchange...
...Their strategy rejected the static security zone concept in favor of extreme mobility and hit and run tactics...
...From jail, two revolutionary leaders, Hugo Blanco and Hector Bejar, have issued statements praising the agrarian reform law...
...The law's provisions struck at the heart of the upper class's base of power -- the large commercial land holdings on the Coast that underwrite the economy's agricultural exports...
...40-9Suddenly, on July 2th, IPC sent Belaunde a memorandum offering to transfer to the state "the surface of La Brea y Pariiias and the installations" and to renounce "any rights it could allege over the subsoil or mineralized zone of La Brea y Parinas...
...Northern Peru Mining Co., a subsidiary of American Smelting Refining, is the third largest copper producer, and the Anaconda Co., through its subsidiary, the Andes Exploration Co...
...corporations did not seem upset with the law's arrangements since their agricultural properties fail to yield a high rate of return...
...It was also much clearer this time that Belaunde had the support of the military...
...28 In 1959, IPC offered to "cede" the subsoil rights if it could retain surface rights and receive a 40-year concession...
...I I-3cent of the population and enjoying a disproportionately large vote due to literacy requirements), nonunionized workers who had recently migrated to the cities, the Catholic Church and those commercial interests favoring industrialization...
...The Cuban revolution swept aside both the upper class and the established military, a fact which left a deep impression on the Peruvian generals...
...and with no apparatus that would tightly link it with these masses, had decided that it was the furious ringing of the bells of revolution that sounded in its ears...
...Industrial complexes directly connected to an agricultural unit -- a sugar mill, for example -will also be expropriated even if they are owned by a third party...
...23 Pike, p. 312...
...Special incentives are offered for the conversion of these bonds into capital for industrial investment...
...Moreover, the protein content of the fish (primarily anchovy) renders it particularly attractive for conversion into animal feed for nations lacking sufficient grain production...
...government to re-evaluate its assessment of the political atmosphere...
...The junta expects a good portion of the approximately $350 million worth of securities to he utilized in this way and therefore spur Peruvian development...
...which included Chase Manhattan Bank, First National City Bank of New York, Chemical Trust, and others...
...has begun to show greater interest in putting Alliance for Progress aid funds at Peru's disposal...
...English edition by Monthly Review in preparation f r 19 36 Imported foodstuffs now account for about 25 percent of Peru's total imports...
...are both developing copper concessions...
...Ricardo Prez Godoy) became too obvious he was summarily expelled from the government...
...This information could be available to the Government-owned company only if they had complete access to IPC's files at Lima...
...Through careful regulation, the regime hopes to drastically increase output and income for development 44 Over the last ten years, the fishing and fishmeal industries nave witnessed a spectacular growth (Peru is second only to Japan in total catch...
...The request was for new security and fire protection information...
...Blanco himself was hunted down relentlessly by the military and finally captured, after being isolated in May, 1963...
...See Sergio Bruna, "Peru: The Role of the Left," Punto Final (June 3, 1969), pp...
...and Odria, 463,085...
...Even before Belaunde came to power, they were convinced that rural armed struggle was the only way to truly liberate the country from capitalism and imperialism...
...The agrarian reform law's success forced the U.S...
...The final blow that completed Belaunde's denouement grew out of a reawakening of the IPC controversy...
...jointly owned by the Cyprus Mining Corp...
...The MIR, establishing valuable contacts in the countryside, carefully set up security zones in four separate areas of the highlands...
...In early 1968, the government was rocked by a series of high-level scandals involving smuggling and bribery (even the President's sister, Peru's First Lady, was implicated...
...Cash will only be paid (up to 100,000 soles) for cattle and equipment...
...It was the peasant upsurge in the highlands from 1962 on that brought the left back to life and gave substance to an armed struggle strategy...
...Irwin's talks proved fruitless but upon returning, he advised against drastic action...
...Even more surprising, the junta permitted its arch enemy, APRA, to freely organize and take part in new presidential elections held only one year after seizing power...
...To press their demands, they went on strike and then began "invading," or better, recovering uncultivated lands, seeking free title to the property...
...It had wished, and it had turned "its" wish into "its" reality, and on these grounds had gone ahead...
...Liberal ADA Ambassador James Loeb was immediately recalled and all economic and military assistance suspended...
...24 Though this first move toward agrarian reform was insignificant in national economic terms, it demonstrated a political awareness of the potential revolutionary threat inherent in the land question...
...between July, 1963, and January, 1964, a spectacular struggle took place throughout the whole Sierra area that occupied the lands en masse, a phenomenon that affected some 300 ranches to which were tied some half-a-million Indian peasants...
...30, 1969), the merger was called off "amid reports from Peru that the government might be on the verge of seizing Cerro's copper mines...
...Despite the squeeze, the economy appeared quite healthy...
...34 Pumaruna, p. 39...
...As for APRA, the agrarian reform will severely weaken its hold over labor on the large commercial farms on the Coast...
...The President's support of the purchase, even in the face of U.S...
...34 In short-run political terms, the Peruvian military scored a major victory with the guerrilla's defeat, giving it new confidence and strength and inevitably plunging it deeper into the nation's politics...
...The new industrialists must either move foreign capital aside, create new industries or play a subservient partnership role...
...After nine months in office, the government's initial popularity (built around the confiscation of IPC) was dissipating due to worsening economic conditions and some political repression...
...The economic crisis worsened in the latter half of 1967 when the weakening position of the sol, stable for over a decade, compelled a drastic 40 percent devaluation (from 27 soles per dollar to between 42-44 per dollar...
...As it turned out, in subsequent negotiations, the Company received lucrative concessions that overly compensated for its "loss" of La Brea y Parinas, including cancellation of all back debts, retention of all its other holdings and the right to explore for oil in a large area of the jungle...
...J AJONE Moquegua SOUTHERN PERU 345 1968/1972 100 130 Copper CERRO VERDE Arequlpa ANACONDA 70 1968/1972 40 50 Copper BAYOVAR Plurs KAISER 91 1968/1982 35 4,000 Phos, Salt, Potaslum Programmed for 1973-1975: QUELLAVECO Moquegua SOUTHERN PERU 100 1973/1975 40 50 Copper MOROCOCHA Junin CERRO DE PASCO 100 1973/1975 40 50 Copper ANTAMINA Ancash CERRO DF PASCO 15 1973/1975 6 8 Copper MICHIOUILLAY Cajamarca AMERICAN SMELTING 250 1973/1975 100 130 Copper SUNDRY 1976-1981: (Chalcobamba...
...I _ I _ I PERU 1969 Cartoon by Aldo, Havana * Via Prensa Latina Liberated Letter from the ESSO-IPC offices...
...In his most dramatic act to date, President Velasco electrified the masses on June 24, 1969, when he announced a new agrarian reform on nationwide radio and television...
...30 Pike, p. 319...
...Certainly the MIR was making a purely subjective and extremely erroneous evaluation of the real subjective conditions of the peasant masses...
...21 Over the last twenty years or so, the region has experienced some major changes due to the combined pressures of population increase, land scarcity, individualization of the Indian communities, increased penetration of national markets and the growth of provincial urban centers...
...Underneath such noble assertions stood IPC's fear of nationalization...
...Much of the increase in mineral production is going to Japan for their rapidly expanding industry and thus integrating the economies of the Pacific Rim countries...
...Even the upper class Prado government rejected this offer -- not wanting to bargain for the rights it already claimed to possess (the government noted that in 40 years all the wells would be dry since crude oil production was already declining...
...Le Monde's correspondent in Lima observed, Financial support to Peruvian industry and trade from private American banks comes to more than $150 million...
...The peasant unions continued but on a more reformist and conservative direction...
...III, No...
...Since its defeat in 1965-66, the MIR has abandoned its "feudal" interpretation of Peruvian reality and created a section of urban insurgency that compliments its active peasant cadres...
...Most of these programs lacked noticeable success...
...Moreover, the token reform proved a practical method of undermining and isolating the threat and set an important precedent that the coastal upper class viewed with deep suspicion...
...owned Cerro de Pasco Corporation in order to divide the upper class's ranks and lessen mounting criticism of his rule...
...This Belaunde refused to do and, as a result, by late 1965 was still not receiving the share of Alliance for Progress funds that his government had earned the right to expect...
...Coincidentally the U.S...
...This corporation, the country's largest private complex, was embroiled in a long-standing dispute centering around its unique control and ownership claim of subsoil rights at the La Brea y Parifias oil fields...
...68-75...
...subscription: $5 In This Issue: PERSEPECTIVE ON THE PERUVIAN MILITARY - PART II...
...Noncompliance will result in the loss of concessions, which will resort back to the state...
...in the first Belaunde cabinet, the equivalent figure was 45 percent...
...10027...
...See Luis F. de la Puente Uceda, "The Peruvian Revolution," Monthly Review (November, 1965), pp...
...economic hostility, demonstrated the precarious nature of his internal political situation...
...Full compensation offers the opportunity to invest in more profitable manufacturing markets...
...This excellent article, written under a pseudonym, is by a Peruvian guerrilla...
...4 Major Mining Projects Potentially Affected by the New Times Limits Projects for Investment and Increase in Mining Production Mine or Geographical Company Investment Develop- Production (Annual) Project Location or Firm (Millions ment Millions Thousands Product (Departmentj of dollars) Period of USS M.T...
...The hacendados in turn passed their disadvantage on to their Indian labor force, who worked either for token wages or for no wages at all...
...Apparently feeling that continuation of the conspicuous privileges of United States oil interests takes precedence over matters of internal Peruvian reforms and renovation projects, the pristine spirit of the Alliance for Progress to the contrary notwithstanding, the Lyndon Johnson administration declined to co-operate with the Belaunde administration unless it would give the desired assurances of following an indulgent policy towards the IPC...
...The government has also announced plans to nationalize the U.S., Swiss, and British-owned telephone companies...
...Amidst charges of election raud, now leveled by APRA, the young reformer easily won the 1963 election...
...The cabinet resigned and a new "businessman's cabinet" was quickly installed to deal with the economic crisis...
...An integral part of the Latin American scene since 1914, Citibank today main- tains 91 fully-staffed branches in the major cities of 18 Latin American countries, including all of the LAFTA countries...
...Approximately 1,500 leftist militants were jailed throughout the country in January, 1963, when the military charged them with instigating disturbances at the Cerro de Pasco mines and other locations in the first phase of a carefully planned plot to overthrow the government...
...The generals also built u support for their position among Latin American countries to counter U.S...
...The crushing defeat of U.S...
...5, 1969)-1I - Government Palace...
...But the growing agitation for nationalization, even among the upper class and APRA, led IPC to cease reinvestments in 1959 and to renew lobbying efforts through the State Department...
...power in Vietnam...
...The rich Humboldt current, which parallels Peru's long coast, is one of the last remaining rich fishing grounds in the world...
...47 The overwhelming popularity of the new law made it next to impossible to criticize, even for the SNA...
...But IPC insisted it "owned" the 400,000 acres, bolstering its case through the years with bribes and arbitrary rulings that enraged national sentiments but ensured huge profits...
...38 Goodwin, p. 41...
...1969), p. 4. The April 23, 1969 issue of Noticias stated that "U.S...
...Every new wealth-producing industry in this century has been penetrated and made to serve the needs of the metropolitan center instead of Peru...
...See Payne for more data, pp...
...Banco Credito, the largest in Peru, is partly owned by Italian banking and industrial interests...
...Only lands abandoned for more than three years can be confiscated without compensation...
...Carlos Rafael Rodrlguez, a member of the Cuban Communist Party's Central Committee and financial advisor, spoke at the latter conference supporting the Peruvian cause...
...36 The government was therefore compelled to borrow from foreign sources, as we can see in Table No...
...16 NACLA NEWSLETTER NORTH AMERICAN CONGRESS ON LATIN AMERICA (NACLA) Vol...
...Peru Serving Peru and all Latin America...
...43 International Telephone and Telegraph owns 69 percent of Lima's telephone system and plans to use the compensation bonds for a hotel complex in Lima...
...For instance, in the Prado administration, 86 percent of the ministers had upper or upper-middle class family backgrounds...
...On the other hand, individual peasants, communities and cooperatives will buy the property over a 20 year period from their earnings...
...The former would require continual re-financing from foreign sources and offer a strong lever for shaping policy...
...another potential $700 million in U.S...
...41 For some data on the social characteristics of the military and how they have affected its actions, see Subcommittee on Western Hemisphere Affairs report...
...In La Convenci6n Valley in the southern Department of Cuzco, where only 8-10 percent of the land controlled by large estates was under cultivation, the peasants were organized into unions led by a Trotskyist movement headed by Hugo Blanco...
...12-28...
...They first demanded an end to obligatory labor for the hacendados and the right to sell all of their crops on the open market (especially coffee, which was gaining a market in the region...
...23 In the late 1950's and early 1960's, peasant attempts to reoccupy land en masse led to several bloody massacres...
...31 But the -4--5very day Belaunde was inaugurated, a virtual peasant avalanche swept over the land, fired with the expectation of the promised far-reaching reform...
...trade union movement) the opportunity to charge him with being "soft on Communism...
...25 The same three major candidates of the 1962 election -- Belaunde, Haya de la Torre and General Odria -- were in the running...
...Instead of just repression (which was liberally applied), an agrarian reform law was prepared for seven impoverished areas in the Sierra, all of which showed definite signs of organized discontent...
...14,000 tenant farmers became landowners with the expropriation of 23 haciendas...
...The government's action co-opted a portion of the movement and encouraged many of the poorer elements to hope for redress through established channels...
...52 The junta initiated a new education law for the universities which primarily sought the destruction of left political control of the campuses...
...private investment in Peru, mostly in copper mining, also is being held up until the issue is settled...
...The Marcona Mining Co...
...Since 1895, the Sierra's landowners have been largely excluded from the most important national ruling circles (i.e., the Sociedad Nacional Agraria, or SNA) and were denied access to a significant portion of locally produced surplus...
...contributing 50 percent of the parent's sales), mines and smelts copper, bismuth (Peru is the world's leading producer), cadmium, gold and silver, lead and zinc...
...28, 1969), stressing their commitment to the free enterprise system...
...That means over 6,000 Citibankers to meet your needs . .. people who know world banking as well as they know the local business conditions, practices and opportunities...
...The barometer for U.S...
...In contradiction, U.S...
...they remained in that state for the next two years as negotiations dragged on, broke down, and began again...
...A continuing drop in domestic food production forced the importation of high-priced foodstuffs (such as wheat, rice, milk, meat, oils and lards...
...mining firm, Cerro Corporation, owned nearly 500,000 hectares and thousands of head of cattle...
...Experts estimate it will cost up to $1 billion to meet the new demands...
...The situation in the Sierra remained explosive as Indian communities and peasants maintained their pressure for land through en masse invasions of large estates...
...U.S...
...42 The reform will tend to increase the chances that defaulted loans will result in foreign takeovers...
...But the severe economic effects of such a move would most likely have driven some of the generals leftward toward more expropriation that might even lead to another Cuba...
...Hence, the junta's repeated assurance about the uniqueness of the IPC affair and its anti-Communist rhetoric ("Our revolution is not Marxist," General Velasco said in August...
...Utilizing counter-insurgency training and new equip- ment supplied by the United States, particularly the Special Forces and the CIA, the generals launched a savage counter-offensive in the urban and rural areas...
...The country was stunned by the initial guerrilla's success in wiping out army units and administering revolutionary justice to several landlords...
...Instead, only one other guerrilla group, the ELN, entered the struggle and formed an alliance...
...As a remedy they proposed that the President simply suspend Congress -- where the center of opposition resided and obstructed legislation -- and unilaterally decree the needed social programs...
...At first the regime tried to cover over these debts by printing new paper currency, which only increased internal inflation...
...Revolutionary Reforms to Transform the Upper Class A few days after seizing power, the new government nationalized La Brea y Parinas...
...We hope to see some pleasant surprises in the near future...
...The 1962 coup by nationalist reform-minded generals triggered a rather violent reaction from the Kennedy administration...
...The movement's slogan "Tierra o Muerte," along with the appearance of armed self-defense groups, brought about numerous bloody confrontations, forcing many landowners to flee their estates and the army to import thousands of troops...
...According to Larson and Bergman (p...
...capital penetration, or more surplus drainage and underdevelopment, rather than a fundamental change in the social control of the means of production (i.e., from control by a few families to public control) or the redistribution of wealth...
...Diplomatic and financial aid were resumed months later only after it became clear the junta would not confiscate the Company...
...are already firmly in the hands of foreign capital...
...For the new military government's case, see the Peruvian General Bureau of Information, Petroleum in Peru: For the World to Judge: The History of a Unique Case (Lima, 1969...
...The "page eleven scandal" was all the generals needed to justify a golpe...
...policy was not determined by Alliance foresight about the need for reforms to stifle revolution, but by the cold economic interests of the International Petroleum Company (IPC) and its business allies...
...Within the country's internal colony, explosive social-economic conditions were building a potentially revolutionary Deasant movement which could threaten the status quo throughout the country...
...Bejar summed up the feeling of the left when he wrote, "This is a vanguard law...
...49 The government tried to counter this financial squeeze by opening diplomatic relations with socialist countries (excluding Cuba) in order to stimulate new trade and credits...
...The terms of the loan appeared to many in Peru to be extremely high, and early complaints were turned into charges of complicity and fraud when it was revealed that Deltec Peruana, the Peruvian subsidiary of a U.S.-based international investment firm, of which the Minister of Finance was president, was one of the firms contributing to the loan...
...They also launched a drive to raise domestic food production, lessening their imports and further improving the balance of trade...
...The ELN, on the other hand, never tied down to a specific geographic area, managed to avoid the military's concentrated fire power while inflicting defeats on the forces of repression at the most propitious moments...
...Belaunde's Campaign and Administration: The Failure of Civilian Reform Unlike the past, the junta's military leaders consciously prevented the emergence of a caudillo who would perpetuate armed forces rule...
...III, No...
...With four complete banks- on-the-scene in Peru three in Lima, one in Callao) and in 46 other countries on 5 continents, Citibank is the right bank in the right place to serve you...
...The 1962-63 Military Junta During the year of its reign, the new military junta in Peru unilaterally enacted some basic reforms that in developed societies have usually been instituted by the national bourgeoisie...
...31 The agrarian reform presented to Congress in 1960 by Premier Beltran in the upper-class Prado government provided for payment in cash over a maximum period of five years...
...Sulfobamba- Apurimac Tintaya) Cuzco CERRO DE PASCO 200 1976/1981 80 100 Copper Source: Andean Air Mail Peruvian Times (Sept...
...52 If clashes with the metropolitan center intensify, however, the military will be forced leftward as its need for lower class support increases...
...along with W.R...
...More likely, the generals were worried about the increasing strength of the peasant movement and threats to disrupt the upcoming election...
...imperialism in Vietnam provided the international conditions that largely pre-empted overwhelming U.S...
...6 P.O...
...30 Slowly it became clear that Belaunde would not nationalize the Company, a fact which in turn improved his relations with the United States but eventually led to his own downfall...
...Once the large agricultural enterprise referred to was established, it could become a closed nucleus of great self-sufficiency in food supplies and provide the milk, meat and cereals needed to feed the entire working population of the mining settlement...
...26 Belaunde's main popular support came from the urban and rural middle sectors (accounting for more than S15 perNAGSLA NEWS LETTER Vol...
...The 1968 Coup...
...They quickly succeeded in dismantling the MIR's supposedly impenetrable security zones, encircling the insurgents and, after several months of protracted struggle, annihilating the rebels...
...By expropriating the land with compensation, the junta compelled the upper class to begin entering industrial pursuits on a new scale and forge itself into an independent national bourgeoisie...
...Peru's militarist, top-down revolution is neither fish nor fowl...
...Events in Peru were moving too fast to permit the impasse to continue...
...Grace Co...
...About the same time, the Peruvian tax court found IPC guilty of failure to pay $144 million in duties on past imports of aviation gasoline, which the Company refused to pay...
...6, October 1960 Published monthly, except May-June and July-August when it is published i-monthly, at 160 Claremont Avenue, New York, N.Y...
...Under the threat of a coup the armed forces demanded that Belaunde surrender the entire direc- tion of the anti-guerrilla campaign...
...A new group, Vanguardia Revolucionaria (VR) was formed in 1965 and today appears to be the most coherent organization on the left...
...Furthermore, moves to strengthen the upper class are potentially left in international terms, for they inevitably must confront the contradiction of "development" based on foreign investment...
...Its portents are therefore as immense as they are incalculable.-14FOOTNOTES For complete references see Part I (NACLA Newsletter Vol III No...
...51.5 percent owned by American Smelting Refining, 22.25 percent by Cerro Corporation, 16 percent by Phelps Dodge and 10.25 percent by Newmont Mining Co...
...General Odria's rule (1948-56) had left many officers with a bitter taste of corruption and unpopularity...
...26 Belaunde received 708,662 votes...
...Because they presently yield a low rate of return and require extensive capital modernization, the companies put up no resistance...
...27 Payne, p. 66...
...James Petras, "Revolution and Guerrilla Movements in Latin America," in Petras and Zeitlin (eds...
...Unlike the middle sectors attracted to the military and to Belaunde's government, these individuals identified with the plight of the lower classes...
...As the first serious coup after Kennedy's inauguration, the administration wanted to demonstrate its opposition to "military dictatorships" (Kennedy described the takeover in a news conference as a "serious setback to the cause of democracy...
...45 The world fishmeal industry is controlled by investors from Angola, Iceland, Norway, South Africa, South West Africa and Peru...
...46 The law permits one owner to cultivate a maximum of only 150 hectares on the Coast and lower maximums in the interior...
...Domestic food output decreased sharply after 1950 and overall per capita food production was down 6.5 percent between 1961-67...
...Thus the United States greeted his election coolly even though his program closely paralleled that of the Alliance...
...The first was a request to Esso Research and Engineering Company from Lima to be put on the distribution lists for all of our progress and project reports...
...The military's decisive victory over the guerrillas, along with the miserable showing of the civilian politicians in the last five years, re-shaped the generals' self-image from that of a mere warden of another class to one of long-term policymakers...
...The freeing of political prisoners (such as Hugo Blanco or Hector Behar of the ELN) or the formation of a new mass political party would probably signal such a move...
...Interestingly enough, Belaunde was unwillingly endorsed by the outlawed Communist Party in the last week of the campaign, giving APRA and U.S...
...and European financial and business circles probably felt the crisis was manageable, given Peru's external debt and need for foreign investment...
...The new junta immediately took steps to recapture some basic industries already dominated by foreign interests and increase Peruvian participation in others...
...In 1966, The New York Times pointed out that Belaunde had to accept a "slow-down" in his ambitious social investment plans, particularly agrarian reform and was "more concerned with maintaining investment confidence than partisan militancy...
...Velasco chose the "Day of the Indian" to issue the new law and, evoking the memory of the Inca insurrectionary leader, Tupac Amaru, he closed the speech with the following words: "We can now tell the man of the earth, in the immortal and liberating words of Tupac Amaru, 'Peasants, the master shall no longer eat your poverty!' Viva Peru...
...It has not solved the problem of Third World neo-colonialism, nor will it...
...42 One year was given to accomplish this requirement, affecting practically all major banks...
...Commercialization and concentration of the land forced thousands of peasants to migrate to urban areas, especially on the Coast, and cast others into the ranks of the rural The NACLA NEWSLETTER is published ten times a year by the North American Congress on Latin America...
...33 At this time, the upper class, together with APRA, held a clear majority in the legislature...
...39 Spalding, p. 37...
...In a comparative analysis of the Prado and first Belaunde cabinets, Payne offers statistical evidence to support the conclusion that a new elite came to power in 1963...
...47 Under special circumstances, for example, where workers are included in profit sharing, up to 200 hectares are permitted...
...In one crucial area -- agrarian reform -the military made the first move toward confronting the upper class's base of wealth and power...
...Each company must submit detailed development plans by the end of this year and begin production by April 30, 1970...
...A the same time, it is not merely the sum of its limits and shortcomings...
...By favoring APRA, U.S...
...Almost immediately, all foreign aid, including Alliance funds, were frozen...
...The new government introduced an agrarian reform bill before Congress with the purported aim of achieving a more just distribution of land, abolishing unpaid labor, protecting communities, providing mechanisms for expansion necessitated by population increases, establishing cooperatives, and extending credit and technical aid...
...48 The Peruvians now claimed IPC owed $690 million in back taxes and offered to pay $71 million for the confiscated property -- when all back debts were paid up...
...One hectare is equal to approximately 2.5 acres...
...Peru: Where the Reformers Wear niforms-" Le Monde - English Weekly Selection (Sept...
...By clouding the investment atmosphere, both in Peru and throughout the continent, it cut down the rate of capital penetration and set an anti-imperialist example that may well be followed elsewhere (i.e., Bolivia's recent nationalization of Gulf Oil...
...In his last theoretical writing (authored in the mountains), Luis de la Puente Uceda states that Peru is a split society -- split between the "feudal" Peru of the Sierra, "the real Peru," and the progressive capitalist Peru of Lima and the Coast...
...communications with the rest of the population were blocked and only small uncoordinated urban terrorist groups answered the call for increased armed resistance...
...the United States...
...48 For Irwin's Rockefeller and other business connections, see NACLA Newsletter Vol...
...By June, 1965, three zones had been prepared and a guerrilla offensive was launched...
...TABLE NO...
...and the huge commodities trading house of Bunge, Borne, Co...
...In retrospect, the MIR lost because, believing in the already revolutionary consciousness of the highland peasantry, it based its-6strategy and tactics on their total active support and defense in the early stages of the struggle...
...Nixon appointed a special envoy, a Rockefeller man, John N. Irwin II, to work out a settlement...
...The International Petroleum Company's facilities at Lima and Talara have been removed from all of our distribution lists as a result of current political problems...
...This cut-off occurred last September...
...Any attempt to defuse the movement through the traditional direct confrontation approach might well spark a full-scale uprising...
...Velasco made a special plea for the students to aid in carrying out the agrarian reform in the countryside...
...5, September, 196...
...The law was immediately applied to eight of the northern Coast's most modern sugar plantations producing 90 percent of the country's crop, including two owned by W.R...
...The Company was in the process of finalizing a merger with Rockefeller's Standard Oil (Indiana) when the military took power and nationalized Rockefeller's IPC...
...Through this fundamental change, they hope to raise productivity, increase national expropriation/appropriation of surplus, and improve the lot of the lower class...
...Most of the land was acquired within a 30 kilometer radius of their smelting plant installed in 1922 that produced toxic gases which were harmful to the local population, cattle, and farmland...
...He suggested a more subtle approach centered around Peru's financial condition...
...43 In the crucial mining industry, new regulations have been issued forcing the big foreign firms to expand the exploitation of their concessions...
...The same article went on to describe how W.R...
...the corresponding figure is 46 percent for the Coast...
...In a wave of optimism, the junta handed over the reins of power to a new type of government, "essentially middle class in origin, youthful and relatively inexperienced in public administration, fairly rep- resentative of the country's geographic regions and primarily technical in its training and outlook...
...interests (especially the U.S...
...Valuation of expropriated property will be based on 1968 tax returns in which owners listed their own evaluation...
...In only one area, however, La Convenci6n, was the law put into effect...
...of Maine and HomestaKe Mining Co...
...By 1961, 1,233 landowners, with holdings of more than 2,500 acres each, controlled nearly 80 percent of the Sierra land, most of it lying fallow or being used only for grazing...
Vol. 3 • October 1969 • No. 6
