Articles - August 2017

Peru's Ambassador Carlos Pareja

Great Grandson Makes Good
By Roland Flamini

Carlos José Pareja Ríos is not merely the son of a leading Peruvian diplomat, he’s also the great grandson of the founder of Peru’s diplomatic service. So it’s not surprising that he opted for a career as a diplomat himself, and is currently the Peruvian Ambassador to Washington—quite possibly the most senior ambassadorial post his government offers.

But the Peruvian ambassador in any capital these days has a positive narrative to tell about his country. Over the past decade, Peru has become one of Latin America’s success stories. Maintaining one of the Hemisphere’s fastest growing economies (6 percent annual growth), continuing to consolidate its gains, and pursuing further reforms to modernize its economy and strengthen its institutions, Peru has noteworthy prospects of reaching high income status. There are still residual problems to overcome, notably social inequality (access to water is still a problem in large parts of the country) and drug smuggling, and 2017 has also brought new issues of the kind that it is difficult to plan against. Earlier this year, the heaviest rains in 10 years
drenched the country, causing victims and destroying farms and infrastructure on a wide scale. Also problematic, a massive bribery case of the Brazilian construction company Odebrecht—the biggest in Latin America—in which
former President of Brazil, Luiz Inacio Lula da Silva , was recently sentenced to jail. The case has ricocheted through several other Latin American countries including Peru. Two former presidents have been implicated, and perhaps worse, major infrastructure projects, in which the now discredited Odebrecht was the main contractor, have been halted even as Ambassador Pareja looks for a major American company with the capacity to finish the jobs.

Another Peruvian challenge is the weakened global commodity market, which Ambassador Pareja says has left Peru’s important mining sector bereft of new orders. The Peruvians are also watchful that the Colombian peace deal between this neighboring government and their insurgents doesn’t lead to a spillover of drug and guerilla traffic across its border. These are the main challenges facing President Pedro Pablo Kuczynski, an Oxford and Princeton educated former American citizen better known as PPK. Elected in June 2016, his task is complicated by the fact that the party (Popular Force), led by his political rival Keiko Fujimori, daughter of former President Alberto Fujimori, now in jail, has a controlling majority in the Peruvian Congress.

On the positive side, Peru and three other Latin American nations—Chile, Colombia and Mexico—have joined together in an economic arrangement to promote trade and investment: the Pacific Alliance. Recently, The Atlantic Monthly magazine said this about the Alliance: “Its members lead the lists of the most competitive economies in Latin America and those where it’s easiest to do business.” The Pacific Alliance could add new dynamism to Latin America, and, some observers believe, the group could become the Latin American economic interlocutor with Asia (Singapore, Australia, and New Zealand have been invited to join as associates) and the United States. But if the four countries could significantly increase the trade among them from the meager 4 percent of total trade that it is now, it would be a very promising start.

Interviewed in his office at the Peruvian Embassy, Ambassador Pareja suggested, with diplomatic tact, that the Pacific Alliance had grown, in part out of a reluctance of free-market countries to be associated with Mercosur, the trading bloc including Brazil and Argentina, as well as Venezuela and Cuba. He also said the Chileans were currently trying to entice Argentina to defect from Mercosur “to join [the Pacific Alliance].”

Diplomatic Connections: What is your assessment of your country’s current economic situation?

Ambassador Pareja: We’ve grown at a very rapid rate since 2003, except for two years, which were not so good. We have a stable economy; we have a stable democracy. The rule of law is respected. We’ve had a lot of investments in mining and other commodities and also in infrastructure and housing. This year, though, the growth rate will be between two percent and two-and-a-half, but that is because of a couple of setbacks. We’ve had the disaster of Niño—rains and floods that destroyed thousands of kilometers of infrastructure, schools, hospitals, housing and bridges. And the other setback, which may be more important, was the scandal of the two major construction companies, which were Brazilian. One company, Odebrecht, won the most important contracts and sub-contracted to Peruvian companies. But now that the scandal has broken out, Odebrecht is no longer allowed to work in Peru any more, and, as a result, their local sub-contractors are finding it very difficult to continue the big projects.

Diplomatic Connections: The other setback must surely be that the boom in commodities is over.

Ambassador Pareja: Yes, and lately we have not had any major investments in the mining sector. The big mining companies in Peru mining copper, tin, gold, and silver, have significant projects running, but there is no new business coming in. And they don’t foresee any commodity price rise in the near future.

Diplomatic Connections: So, what is the government doing about these three challenges?

Ambassador Pareja: This situation is PPK’s [President Pedro Pablo Kuczynski’s] biggest challenge as the government tries to overcome all these problems. That’s why I am talking to construction companies to take the place of the Brazilians. After El Niño, there is even more work to be done on infrastructure, but the Odebrecht scandal means that new companies have to come in, and that doesn’t happen from one day to the other. A lot of Peruvian companies are in trouble because of Odebrecht, and that has to be cleared up. We are seeking more investments in mining. Fortunately, we are also very big in fishing, and that sector is booming at the moment, bringing in international revenue and providing work.

Diplomatic Connections: Doesn’t Peru also have an important tourist industry?

Ambassador Pareja: Well, we’re working on that. When I went to say goodbye to the president before coming to Washington to take up my appointment, he told me to go after more investment for tourism, more investment for construction, and, of course, for mining. Additionally, he told me to take care of the Peruvian community in the United States. There are approximately 800,000 Peruvians living in the United States, half of them are already U.S. citizens.

Diplomatic Connections: Doesn’t the president also face a political problem, in the sense that the legislature is controlled by the opposition, the Fuerza Popular party (Popular Force) led by Keiko Fujimori?

Ambassador Pareja: They have an absolute majority in the one-chamber Congress. Out of a total of 130 seats, Fujimori has 71, and the government party (Peruvians for Change) only has 18.

Diplomatic Connections: So, the Peruvian electorate voted for PPK in the presidential election, and for his opposition in the legislative elections?

Ambassador Pareja: Keiko Fujimori won the first round in the presidential election and at the same time 73 seats in the Congress (now 71 because of the death of two members). But Keiko didn’t have enough votes to avoid a run-off. The second round was between Pietro Pablo Kuczynski and Keiko Fujimori. The supporters of the other--unsuccessful--presidential candidates voted for PPK, and he won.

Diplomatic Connections: So, the runoff vote was in effect a vote against Fujimori.

Ambassador Pareja: Yes, but it was also because PPK is a true democrat, and he’s a man with a clean record. He won with the votes of the right, the center and the left. His own party is not that powerful, but he was an attractive figure.

Diplomatic Connections: Was the result a surprise?

Ambassador Pareja: It was a surprise even to him. His majority was only 48,000 votes [less than half a percentage point]. But the Fujimori movement remains very strong in Peru.

Diplomatic Connections: Why does Fujimori still have such an impact in Peru?

Ambassador Pareja: He still stirs great emotion. What the people remember is that he ended (Marxist) terrorism, which was causing chaos, especially in the highlands. We had hyperinflation at that time, and he brought it under control; he opened the economy for foreign companies to invest in Peru. That’s the good part of his legacy, and there is a crusade by the family to keep the memory of it alive. The bad part of his legacy was the corruption of his government for which he is now in jail, and the censure he received because of violation of human rights.

Diplomatic Connections: If his daughter had won, do you think she would have released her father from prison?

Ambassador Pareja: I wouldn’t know, but that was the thinking, and one of the major themes of the left and PPK’s supporters.

Diplomatic Connections: Is it fair to say that Peruvian politics are dysfunctional, but the economy is efficiently run by the technocrats?

Ambassador Pareja: Yes. The Central Bank works. The investment law is the same for foreign investors as for national (Peruvian) investors; there is free inflow and outflow of revenue, and we have a stable exchange rate with the U.S. dollar ($1=3.25 Peruvian sol), which has been the same for many years.

Diplomatic Connections: Two of the president’s predecessors are involved in this Odebrecht scandal. Is that so?

Ambassador Pareja: Yes, former President (Alejandro) Toledo is already accused of bribery [accepting $20 million in bribes, which he has denied]. He lives in California, and there is an extradition process with the United States.

Diplomatic Connections: So, you have to deal with his extradition?

Ambassador Pareja: Unfortunately. There is an extradition agreement between the U.S. and Peru, and there is full collaboration on the part of the Americans. In the past week, financial investigators are here working with the U.S. Justice Department. The former president is accused of laundering money through the United States. Odebrecht put money in London. That money came through the U.S. to Costa Rica, where he opened an account, and then to Peru where he bought several properties.

Diplomatic Connections: How does the peace agreement in neighboring Colombia impact Peru?

Ambassador Pareja: Peru was very much in favor of the deal; we feel there was a good negotiation, and we supported President Santos’s negotiations, and PPK went to the signing of the agreement. Of course, there is concern that some of the insurgents will come through the jungle and cross into Peru. The defense ministers (of Colombia and Peru) met to organize collaboration on this issue. The terrain is a jungle, and a river, and we’re afraid that it will increase narco-traffic—and that also has an impact on crime.

Diplomatic Connections: Don’t you already have a problem with kidnappings?

Ambassador Pareja: No, not that much. We have a problem with cocaine smuggling through our ports, and the corruption that makes this possible.

Diplomatic Connections: How would you describe bi-lateral relations with the United States?

Ambassador Pareja: Fortunately, we have full collaboration with the United States including good relations on the political and economic levels. President Kuczynski was the first Latin American head of state to visit President Trump, that was one month after he took office. The meeting lasted 45 minutes; it went very smoothly. Our president told him that Latin America was a natural ally of the United States and Peru especially. They have been on the phone four times subsequently, and when we had the floods, President Trump called PPK and asked what do you need. In response, PPK said we need transportation, and he sent two C130s. They were there for three weeks. After his statement on Cuba, President Trump called two leaders, Canadian Prime Minister Justin Trudeau and PPK, to tell them what he had done. We’re also working hard on preparations for the Summit of the Americas that takes place every three years, and in April 2018, it will be held in Lima. President Trump has been invited, and said he hopes to be there.

Diplomatic Connections: How will Peruvians be affected by the Trump Administration’s tighter restrictions on immigration?

Ambassador Pareja: Half a million Peruvian immigrants are here legally as residents, and 400,000 are still working on their residence. We have hardly any problems with them. There are hardly any crimes. The great majority of them come into this country with a visa, and then they stay longer than they should, which is a minor crime in the United States. A major crime is to enter illegally. And then, they are educated. All of these people have been to school, they have skills and work hard which allows them to easily insert themselves into the society while sending money home.

Diplomatic Connections: Are remittances important in the Peruvian economy?

Ambassador Pareja: Yes. Peruvians send $1.5 billion to Peru. It helps families send their children to school and university, to finish a second floor to the house.

Diplomatic Connections: What about defense cooperation with the U.S.?

Ambassador Pareja: We have a good relationship with the defense establishment, but we don’t buy a lot from the United States. Our Navy is supplied from Holland and Italy; we buy our military helicopters from Russia. That pattern was established during the military dictatorship from 1968-1975 when they changed everything. Private corporations have American helicopters that serve the oil companies.

Diplomatic Connections: As Latin American countries become stronger economically and seek closer regional cooperation, for example Mercosur, do you think the Hemisphere is moving towards a Latin American version of the European Union?

Ambassador Pareja: No, I don’t think so. What has progressed a lot is the Pacific Alliance, the economic bloc consisting of Mexico, Colombia, Peru, and Chile, which was conceived by (President) Alan Garcia. You know, when he was president, the first time, Alan Garcia had left wing policies. Then, he went to live in Europe for many years, and in his second term, his ideas were right-of-center, especially on the economy. It was he who proposed the Pacific Alliance, and now, we have commercial agreements that are very important. At the last meeting they had, two weeks ago in Colombia, the four nations decided to admit associated countries. These are Canada, Australia, New Zealand, and Singapore–all countries with open economies.

Diplomatic Connections: Is Peru also a member of Mercosur?

Ambassador Pareja: No. (Former Argentinian President Cristina) Kirchner decided to include Venezuela, and now (Mercosur) wants them out, but, of course, they don’t want to leave. Actually, once Kirchner had left (at the end of her term), the Chileans favored Argentina joining us. What the Chileans want is for (President Mauricio) Macri to open up the Argentinian economy and then (the Argentinians) can relate with us.

Diplomatic Connections: Would that be the end of Mercosur?

Ambassador Pareja: Well, the other countries have to work on it.

Diplomatic Connections: You were here before from 1984 to 1990 as political counsellor. How has the city changed in the intervening years, and also, how has it remained the same?

Ambassador Pareja: First of all, Washington has always been a beautiful city, but some areas have changed. The change from 16th Street to the Capitol is surprising. What has really changed for me is how politics work in Washington. Twenty-five, thirty years ago, you had to read the Washington Post, the New York Times, the Wall Street Journal and those were the opinion makers. Now, you have all these television channels and the social media. Also, the dynamic of politics has changed a lot. You have to work hard to get to the essence of what is going on.

Diplomatic Connections: Do you tweet?

Ambassador Pareja: No, I have a Facebook account, and the embassy has a very active public diplomacy. We have an embassy Tweet and an embassy Facebook, and we are very active in these media.

Diplomatic Connections: Yours has been a long and distinguished career in diplomacy. What advice would you give to a young man or woman interested in a diplomatic career today?

Ambassador Pareja: Well, my father was a diplomat; my great-grandfather founded the Peruvian Foreign Service. My children don’t want to become diplomats: they say it’s too structured, too hierarchical. I would tell any aspiring young diplomat that it’s still a very interesting career, and that a diplomat has to know a little bit about everything; you have to know about politics, and commerce–and you have to have a little bit of luck. My career has been more political then commercial.

Diplomatic Connections: But the job has changed, hasn’t it?

Ambassador Pareja: In Washington, for example, there are all these think tanks, all these functions, and you are pressed to attend a lot of these events. Whereas, once upon a time, private dinners were important: you established a relationship with a congressman and his wife as a couple. Now, congressmen leave on weekends, their families don’t live in Washington and such relationships are harder to form. Now it’s work, work, work.

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