Date: Thu, 12 Sep 1996 14:47:00 GMT
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Subject: NACLA: Peru: Fujimori's Rural Policy

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** Topic: Fujimori's Rural Policy by Nelson Manrique: July/August 1996 **
** Written 1:46 PM Aug 27, 1996 by nacla in **
Reprinted from the July/August 1996 issue of NACLA Report on the Americas.
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The Two Faces of Fujimori's Rural Policy

By Nelson Manrique, in NACLA Report on the Americas, July/August, 1996

Nelson Manrique is professor of history at the Catholic University in Lima, Peru. Translated from the Spanish by Peter O'Driscoll.

The government of Alberto Fujimori implemented neoliberal policies rapidly in most spheres of the Peruvian economy, especially after the 1992 autogolpe, which gave the President greater leverage to impose painful reforms. The rural sector, however, was a notable exception. It was in the Andean highlands, after all, where the Shining Path insurgency had emerged, and the continued impoverishment of most of the peasantry presented a sticky political problem for the government. A handful of timid measures during Fujimori's first administration, designed to promote private investment in agriculture, had had little effect. By 1995, however, with Shining Path's main leaders behind bars and its armed activities on the wane, the government began to take bolder steps in promoting market relations in the agricultural sector.

In July of that year, Congress passed Decree Law 26505, the long-winded "Law of private investment to promote the development of economic activities in the lands of the national territory and in the campesino and indigenous communities." As its name suggests, the law seeks to promote private property in the countryside. This was a radical departure from the agrarian reform that had been implemented in 1969 by the military government of Gen. Juan Velasco, which implanted cooperative and communal forms of property ownership in 75% of the country. While governments have been chipping away at Velasco's social and economic reforms since 1980, none has gone so far as the Fujimori administration. The new "land law," in effect, is the final nail in the coffin of Velasco's agrarian reform. Opposition to the law has emerged, however, by both peasant organizations and legislators wary of the impact of privatization in the countryside. To date, the law remains entangled in the legislative process.

Velasco's land reform dramatically changed conditions in the Peruvian countryside. Prior to the reforms, the countryside was dominated by large landed estates, known as haciendas or latifundios, that coexisted with minifundios, tiny plots cultivated by campesinos. Four percent of the rural population owned 56% of the cultivable land, mostly in the form of latifundios, while 96% of rural dwellers controlled 44% of the land, divided into innumerable minifundios. Coupled with land scarcity--only 6% of Peru's land is arable- -this skewed land distribution gave rise to dramatic rural conflicts. Velasco's agrarian reform sought to bring peace and development to rural Peru by redistributing the land.

In its effort to promote worker-owned enterprises, the Velasco regime established a complex system of cooperative land ownership. Local cooperatives, in this vision, would link up to form larger regional and national federations of producers, which would coordinate agricultural production throughout the country. The cooperative model was widely established along the Peruvian coast, in cotton and sugar plantations. Because of the predominance of feudal-like relations in the highlands and the serf-like condition of the peasantry, however, the government believed that it would have to create new structures to manage the cooperatives. State planners, who had little knowledge of the internal workings and democratic forms of governance of the campesino communities, believed that the state's cooperative model was better suited to promote rural development than the campesino communities. As a result, two models were adopted in the highlands. In established campesino communities, communal forms of governance were restructured, as an intermediate step on their way to becoming "communal cooperatives." In the case of areas dominated by landed estates, state-run cooperatives, known as Agricultural Societies of Social Property (SAIS), were established. The SAIS incorporated the haciendas and the surrounding campesino communities, and promised economic benefits to all members.

In the short term, the land reform calmed the agitated rural waters. In the long term, however, it became evident that the military government's planners had designed their reforms without taking into account the demands of the campesinos, who wanted to recover ownership over the lands that had been stolen from them by the encroaching haciendas in the pre-Velasco years. The haciendas had disappeared, but the cooperatives retained the structure of the latifundios. In most cases, moreover, the model of collective ownership proved to be economically unviable. Only some of the coastal cooperatives, which had taken over modern, capitalist haciendas, survived into the 1990s. By contrast, the communal cooperatives, based on the production of campesino households, and the SAIS, which were built upon traditional haciendas and their precapitalist mode of production, failed miserably. Many of the cooperatives on the coast and the communal cooperatives in the highlands were gradually dismantled, and the land was divided among the farmers, a process known as parcelization. Today, small-scale farmers constitute the bulk of rural landowners: 70% of all land under cultivation is under 50 acres.

The struggle over the SAIS was more complex, since the state functionaries who ran them had a vested interest in retaining the cooperative structure. This led to many bitter struggles between state administrators and the campesino communities. In many parts of the country in the 1980s, campesino communities carried out massive invasions of SAIS lands to accelerate the parcelization process.

Into this conflict stepped Shining Path. It sought to channel campesino discontent against the state bureaucrats who managed the SAIS, as well as their frustration with the failed attempts of the left-wing agrarian federations to peacefully transfer the lands to the campesinos. This was a marked contrast to the 1970s, when Shining Path denounced land takeovers as "reformist" attempts to deepen Velasco's agrarian reform. At the same time that Shining Path sought to destroy the SAIS, it also sought to eliminate the campesinos' independent organizations that were leading the battle against the SAIS.

The case of the "SAIS Cahuide" in the Canipaco valley in the central highlands of Junin is illustrative in this regard. After the campesinos invaded 30,000 acres of SAIS land, prompting the cooperative's General Assembly to approve its definitive liquidation, the state bureaucrats in charge systematically blocked the land transfers. A month later, in January, 1989, a Shining Path column destroyed the buildings and the productive infrastructure of the SAIS Cahuide, and divided the livestock among the cooperative members. Shining Path offered no alternative for the organization of work and production. Its objectives were, essentially, to force the campesinos to return to subsistence production, in order to limit the supply of food to the cities, and to recruit them to the "popular war."

Shining Path gained initial acceptance among the peasantry from the Canipaco Valley not by offering economic alternatives, but by providing services that the government had abandoned: maintaining social order, protecting campesino property by staving off livestock thieves, and providing a justice system that, while Draconian, was at least quick and free. As events unfolded, however, this acceptance gave way to open resistance. Part of the problem was Shining Path's imposition of its own structures on local forms of communal government. In addition, it proved unable to manage the latent intra-communal conflicts over land. In mid-1989, some Shining Path activists took sides in a violent conflict between two communities over land. The rival community turned over the guerrilla activists to the police, prompting a bloody reprisal in which Shining Path executed 12 campesino leaders. In the meantime, several former campesino leaders attempted to re-establish their communal forms of government, marking the true beginning of Shining Path's problems in the countryside. The armed forces arrived several months later, and found it easy to organize the Canipaco residents into armed civil-defense patrols to combat Shining Path.

This scenario of initial campesino acceptance, then rejection, of Shining Path repeated itself, with some regional variations, throughout the Peruvian highlands. The peasantry began to see the military as a more powerful ally than Shining Path. The military's change in strategy facilitated this shift: its indiscriminate attacks on the rural population had given way to more selective forms of repression. By the early 1990s, the proliferation of civil- defense patrols--with varying degrees of linkage to the military--had bogged Shining Path down in a rural war of attrition. The endless chain of attacks and reprisals between communities which had organized into civil-defense patrols against Shining Path and communities accused of supporting the guerrillas contributed to Shining Path's decision to shift its main operations to Lima. This move to the city, however, led to a series of setbacks, culminating in the capture of its top leader, Abimael Guzman, in Lima in September, 1992.

Since then, Shining Path's activities have declined sharply. The waning insurgency, coupled with the strong presence of the civil-defense patrols (and their military allies) in the highlands, allowed the government to consolidate its control over most of the countryside. Fujimori's popularity in rural areas--primarily thanks to his perceived successes in neutralizing Shining Path--was bolstered by a savvy campaign of public-works projects, including the construction of new schools, new roads, and the repair of dilapidated and damaged rural infrastructure. With Shining Path at bay, and his support in the countryside assured, Fujimori decided that now was the time to expand his neoliberal reforms to the rural front. Shortly after Fujimori's successful re-election in April, 1995, Congress passed the free market-inspired land law.

Velasco's reforms imposed an ownership limit of 375 acres to prevent the rise of new haciendas at the expense of small farmers and peasant communities. Fujimori's land law removes all limits on land ownership. The law also overturns decades of legal norms designed to protect campesino community lands from being divided up and sold off. While the law pertains only to community lands along the coast--which are the most fertile and desirable--observers fear that the government will soon seek to extend the new law's reach to the highlands. Finally, the government plans to hand over unused state-owned land to landowners whose holdings were expropriated by Velasco's reforms.

Campesino organizations have protested against the land law, which they say does not guarantee their legal ownership of communal lands. Only 2,000 of the 5,200 campesino communities that have been officially recognized possess registered land titles. The law does not say how communities with unregistered or no land titles will be treated. This is, of course, a particularly urgent issue for campesino communities along the coast, whose land can now be freely bought and sold.

The land law reflects the marked duality which is apparent in the government's overall treatment of agriculture along the coast and in the Andean highlands. This duality is a direct outgrowth of the contradictions inherent in the government's neoliberal reforms. Along the coast, where the fertility and productivity of the land have whet the appetite of the private sector, the government aims to make all land subject to market conditions. In the highlands, on the other hand, land is scarce, rough, and unproductive. The campesinos own small plots and employ cultivating techniques that pre-date the arrival of the Spaniards. They work the land according to the rain cycle, since few irrigation channels exist. Simply put, the conditions for capital growth do not pertain in the Andes. In neoliberal economic terms, the coast is a highly profitable investment, while the highlands are utterly dispensable.

On the coast, powerful business consortiums are eager to gobble up lands from impoverished campesinos. The cooperatives that have survived continue to grapple with the economic crisis and, in some cases, poor management. Many sugar cooperatives--one of the few remaining bastions of Velasco's reforms--are dividing up and selling the land. In Paramonga, one of the most important sugar cooperatives in the country, private investors sidestepped union negotiations with the state over how to restructure the cooperative by offering to buy the workers' shares and pay them several months in back-wages. The single largest share-holder of Paramonga is now the Delgado Parker group, one of the country's most influential business consortiums.

The highlands are a different story altogether. The private sector has shown scant interest in investing in the Andes. History has shown, however, that the highlands can potentially be a political time bomb. Shining Path is only the most recent (and by far the most bloody) manifestation of this explosiveness. Hence, the Fujimori administration is reluctant to carry out a full-scale neoliberal reform of the rural sector in the highlands. In fact, in the wake of Shining Path's decline, the state has continued to play a significant role in highland agriculture, despite its iron- clad commitment to neoliberalism elsewhere. The government's shutdown of virtually all public institutions that promoted small- and medium-scale agriculture at the outset of Fujimori's administration seemed to portend the state's withdrawal of its support for the rural sector. Yet institutions that were eliminated, such as the Agrarian Bank, which supported agriculture through credit and subsidized interest rates, were simply replaced by a new set of institutions that dispense similar amounts of resources. Through the new rural agency FOPEAGRO, for example, the state has extended nearly $250 million in credits to small farmers each year since 1994--about the equivalent of the credits extended annually by the Agrarian Bank. The National Project for the Management of River Valleys and Soil Conservation, which began its activities in 1995 with a budget of approximately $3 million, now has an annual budget of $100 million to support rural industries and health-care programs.

These programs are not designed, however, to promote rural development. Their paternalistic logic smacks of clientelism. Funds are channeled to the population largely in periods preceding elections. They offer mainly short-term assistance, and show little concern for improving the productive capacity of small farmers. The government's social-investment fund, Foncodes, for example, uses foreign donations to buy agricultural products from poor campesinos. Only a small fraction of rural farmers can put up collateral to obtain the credits from FOPEAGRO which they need to improve their output.

The government is taking a calculated risk: by beefing up a rickety clientelistic system in the highlands, it dares to incur the wrath of World Bank functionaries, whose obsession with the ideological purity of structural adjustment prevents them from seeing how the social consequences of neoliberal reforms might exacerbate social conflict in Peru. In the rural sector, for example, the government's exchange-rate policy, which clearly favors imports, has devastated local farmers, who cannot compete with cheap food imports. The short-sightedness of these functionaries parallels that of U.S. government bureaucrats who insisted on imposing the eradication of coca crops as a "solution" to drug trafficking, even when this policy was pushing coca producers by droves into the arms of Shining Path. Despite its periodic announcements that Shining Path's demise is at hand, the government understands that the guerrillas could potentially rebuild their social base among distraught rural farmers if conditions were to deteriorate further.

The government's steps and missteps in its agricultural policy--dictated primarily by the greed of the private sector, which covets the fertile campesino lands on the coast--has created a volatile situation. Rather than seeking to improve the productivity of the thousands of small farmers throughout the country, the government has myopically opted in favor of big business in the remote hope that this will make the rural economy more dynamic. More likely, however, stripping independent holders of their land will lead to a new concentration of land in the hands of the few--as well as new forms of rural conflict.

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