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Peru: The ‘Poster Child’ for the World Bank in Latin America

October 13, 2015

Nate Singham

The World Bank praises the Peruvian development model despite blatant environmental and human rights violations.

Peru is hosting the 2015 Annual Meetings of the World Bank Group and the International Monetary Fund this weekend, making it the first Latin American country to do so since 1967.

Leading up to the meeting, the U.S.-based think tank the Oakland Institute issued a report Tuesday titled “Peru, The Poster Child for the World Bank in Latin America” which shows how the South American nation has emerged as a laboratory for World Bank neoliberal policy prescriptions.

The study found that over the last 25 years the Peruvian government has aggressively pursued foreign direct investment in order to finance large-scale infrastructure projects, as well as controversial extractivist projects, often at the expense of human rights, environmental sustainability, and economic justice.

According to Anuradha Mittal, Executive Director of the Oakland Institute, “The Bank supports projects that have had devastating social and environmental consequences and very little benefits for the Peruvians.”

As the host nation, Peru is particularly vulnerable to the impacts of climate change. A report published by the Bank Information Center last month that assesses the World Bank’s activities in Peru found that the institution’s imposed development models in the country have exacerbated Peru’s vulnerability to climate change risks.

“The model of growth supported by the (World Bank Group) for Peru was overly dependent on climate vulnerable and climate destructive sectors, without adequately improving the country’s regulations and capacity to manage the climate risks,” the report stated. “This has exacerbated Peru’s vulnerability to climate change risks.”

Despite having ran for office advocating environmental issues and populist policies, Peruvian President Ollanta Humala has since authorized over a dozen projects without prior consultation of affected communities. The Peruvian People's Ombudsman identified a total of 138 social and environmental conflicts nationwide as of August 2015, the majority of which are caused by invasive infrastructure projects.

The Oakland Institute’s Mittal said the World Bank’s “influence on the country has led to violent social clashes, an increase in unchecked corporate power, and undermined Indigenous Peoples’ access to land and natural resources.”

Local communities currently oppose 100 extractive projects in Peru, mainly over the effects on local water supplies or disagreements over the level of benefits to be awarded to nearby populations, stated a 2015 report by the Peruvian Ombudsman's Office.

Peru is also the fourth most dangerous country to be a land or environmental defender, according the U.K.-based NGO Global Witness.

Nonetheless, transnational corporations have criticized the government for the amount of time it takes for infrastructure projects to advance in Peru. In May, the Peruvian Congress appeased private sector demands by approving legislation which guts the process for evaluating environmental and labor rights in an effort to expedite the authorization of infrastructure-related permits. In an interview with teleSUR English, Oakland Institute Policy Director Frédéric Mousseau criticized Peruvian lawmakers for promoting legislation aimed at securing private investment at the expense of environmental and human rights.

“Over the past three decades, successive Peruvian governments have followed the Bank’s blueprint of deregulation and privatization, and cut down labor protection standards as well as environmental safeguards to become make themselves more attractive to foreign investors,” said Mousseau.

Despite these troubling tendencies, World Bank President Jim Yong Kim has praised Peru’s development model.

“[Peru’s] impressive and improving track record shows that Peru has much to share with the world about promoting development. This is just one reason why it’s a natural fit to host our Annual Meetings in October,” said Kim following a meeting with President Humala in May.

Both critics and supporters of the Peruvian development model agree that Peru is an appropriate host for the World Bank Annual meetings, but for different reasons. As policy expert Mousseau points out, “The World Bank intends to showcase the Peruvian ‘success,’ a result of neoliberal policies and reforms to the rest of the world.”

However, he added, “The Peruvian development model, largely based on extractive industries and export of raw materials, has concentrated the country’s natural resources and wealth in the hands of few private corporations at a high cost for the Peruvian population and the environment.”

For neoliberal institutions like the World Bank, apparently this is “success.”