Part of the reason for the sell-off is the demand of the International Monetary Fund (IMF) for Peru’s government to cut its budget deficit. Selling state assets is expected to raise $700 million.
On 14 June the government led by the right-wing president Alejandro Toledo went ahead with the sale of two state-owned electricity generators in the Arequipa area in the south of Peru.
A Belgium company has paid $167.4 million for the companies and Toledo had promised that part of this money will be invested in the area. More people will have electricity and new jobs will be created. Workers and the poor do not believe any of this and have every reason not to.
Protesters know that when privatisation has taken place previously jobs are lost. Furthermore, proceeds from the sale do not benefit local people but are siphoned off to corrupt politicians.
Thousands packed into Arequipa’s main square over the weekend to demonstrate against the sale of public assets. A state of emergency was declared and police and troops were drafted in to break up the protests. Hundreds of demonstrators were injured and one man has been killed.
Official buildings were attacked and the airport forced to close. A general strike has brought the area to a standstill.
Toledo himself promised not to privatise public utilities in his election campaign back in July last year. His ratings are down to just 20% as his government has faced demonstrations and protests against privatisation and unemployment ever since it came to power. Strikes took place in many towns and cities on 14 May.
55% of people attempt to survive on $1.25 dollars a day while those unemployed and not in full-time work account for 50% of the population.
The government has put the privatisation plans on hold awaiting a court ruling on the legality of the sell offs. One minister has already resigned announcing his opposition to the state of emergency.
From bitter experience the workers and poor understand the devastating effects of privatisation and have been prepared to face riot police and armed soldiers to demonstrate and strike against the Toledo government.