Privatisations spark riots in Peru

BY SOLEDAD GALIANA 

Today, Mary Harney is cutting back on FÁS training schemes. Tomorrow, the government will be trying to privatise the ESB. The privatisation of electric companies has become the latest fashionable economic trend around the world, where governments are only too ready to sell the family silver in exchange for quick bucks to patch up their financial mistakes.

In Latin America, opposition to the privatisation of electricity companies is top of the agenda for the indigenous groups and social and community organisations who know it is a mistake of huge proportions to sell such a key resource to private companies with headquarters in Europe or the US.

On Sunday 16 June, Peru's government declared a state of emergency and sent extra security forces to its second city, Arequipa, to quell bitter protests against the previous week's privatisation of two electricity generators, Egasa and Egesur. Officials say the protests caused some $15 million in damages.

Local authorities said seven people were injured in clashes on Sunday 16 June, including two police officers and one civilian with gunshot wounds, and some 15 were arrested in protests that had been continuing since the previous Thursday.

Residents are bitterly opposed to the sale of Egasa and Egesur, fearing higher bills and layoffs and accusing President Alejandro Toledo of backtracking on a pledge made during the 2001 election campaign not to sell them.

"Toledo promised in Arequipa that he wouldn't privatise Egasa and Egesur. We're only asking him to keep his word," Geronimo Lopez, head of a local pressure group, told CPN radio.

On Friday 14 June, Toledo's government sold the two utilities to Belgium's Tractebel for $167.4 million. Tractebel is a unit of French utility Suez. The sale took place despite weeks of delays, strong protests and work stoppages in the southern regions where the companies are located.

Thousands crammed into the main square. Demonstrators holding stones and poles shouted slogans against President Toledo. Police using tear gas broke up stone barricades that had been set up for weekend demonstrations. The rally was accompanied by a citywide strike that shut down businesses and public transportation as protesters blocked streets, highways and the local airport's landing strip with rocks, broken bottles and burning tyres. Flights were cancelled after protesters walked onto the runway and refused to leave.

Toledo's spokesman, Carlos Urrutia, told reporters he hoped the 30-day emergency measures would restrict some civil liberties - police said no one would be allowed in or out of the city. "A curfew is also likely," Urrutia said. "The idea is to control movement and violence. We have $15 million damages."

Arequipa police chief Gen. Eduardo Perez said 150 extra police would be on duty and Defence Minister Aurelio Loret de Mola has arrived in Arequipa to oversee security.

Interior Minister Fernando Rospigliosi said irresponsible local authorities - local mayors have been on hunger strike for five days against the privatisations - had allowed vandals to overrun the city. Local officials appealed for calm.

Privatisation - a key plank of the 11-month-old government's economic policy - has turned into the biggest headache for the already deeply unpopular Toledo, whose rating in opinion polls is down to nearly 20 percent amid frustration at slow job and wealth creation in a country where more than half the population lives on $1.25 a day or less.

The government, seeking cash to plug a budget deficit economists say could prove hard to tame this year, hopes to raise up to $800 million via state sales this year and says it will spend half the cash on infrastructure projects.

But it acknowledges it has failed to explain the merits of privatisation to a public wary after the experience of the 1990s, when then President Alberto Fujimori raised some $9 billion through a programme of massive privatisations but much of the cash was squandered.