Translations

Gerardo Damonte Valencia

State, Government, and Extractivism in Peru

Translated by Alexandra Alván, Rodrigo Ferradas

Introduction

Twenty years ago, an authoritarian regime decided to relaunch extractive development in Peru by taking advantage of the increase in the prices of raw materials after several years of stagnation in the sector. The government, within the context of the promotion of neoliberal reforms, went for a privatisation model in the extractive sector. It also took action to attract private investments by means of policies of concession of natural resources and tax exemptions as well as measures aimed at tailoring the environmental and social institutional practises of the state to accommodate private enterprises. The design and implementation of these policies left a large space for private initiatives and for the development of corporate self-regulation policies since the government considered that the private sector was more efficient than the state in environmental and social issues.

Due to these reforms — undertaken in a favourable global context — Peru entered a new cycle of economic growth accompanied by the expansion of the extractive frontier. The extractive sector, particularly mining, experienced an investment boom in large-scale mining, which led to a significant increase in its relative weight for the national budget. Thus, for instance, mining exports have increased exponentially in the last two decades, going from nearly 1 971 million US dollars in 1994 to 26 141 million in 2012 (Damonte 2014: 47). The development of big extraction projects and the multiplication of small-scale mining in several regions of the country have expanded the extractive frontier towards lands held by peasants and indigenous peoples. In these areas, extractive corporations and small-scale mining compete with peasant or native communities and farmers for resources such as land and water. As a result, the Peruvian State has had to deal with both the multiplication of conflicts surrounding extractive projects and the growth of informal and illegal small-scale mining with little success. In both cases, we observe problems of governance which the current Peruvian State seems to be unprepared for.

How could one characterise the Peruvian State which emerges from the neoliberal reforms concerning the extractive sector? What are the governance limitations that the state faces in this sector? This paper seeks to answer these questions by analysing the characteristics and limitations of the Peruvian State to better understand the governance problems it faces. The general argument goes like this: The state that arose out of the neoliberal reforms has been unable to develop the necessary institutions to guarantee a socially viable extractive development. Particularly, the reliance of the state on the global market, and its economic and political dependence on the private large-scale extractive sector are key elements to understand the state’s behaviour and its governance limitations.

Following Joel Migdal (2001), I define the state as a battle arena for power groups and interest groups formed within society: States change according to the correlation of social forces which run through it. Thus, a state is not a monolithic institution separated from civil society, but a dynamic space in an ongoing process of reconstruction. Additionally, I define governance as the state capacity to govern by interacting with other actors of society; this capacity to govern implies the capacity to legitimately exercise sovereignty over the national territory. Governance problems arise when social actors question the state’s authority to govern or when certain areas of the national territory escape the state sovereign control (Risse 2011) or lie at the margins of it (Das & Poole 2004) due the state’s own limitations.

This paper is divided into three sections. In the first one, I analyse the state that results from the neoliberal reforms with the aim of showing its limitations in the context of the extractive boom. In the second section, I seek to understand how the Peruvian State works, despite its limitations, in the extractive sector. Finally, in the third section, I present some general remarks as a conclusion.

An Extractive State and an Absent Project for a Country

A salient trait of the Peruvian State is the fact that it has not been able to set itself a long-term project focused on diversified development. The state has concentrated on promoting transnational large-scale mining, making it a public priority. Additionally, the set of policies aimed at incentivizing this activity has been largely sectorial, with little to no articulation with other state policies. On the one hand, there have been mechanisms to facilitate extractive investment and development, such as the improvement of the system of mining concessions and tax exemptions. However, these mechanisms are not related to development initiatives in other sectors (Damonte 2008). As a result, the systems of information concerning mining work much better than those of other sectors. Similarly, efforts to grant property titles for rural land have been deployed much faster in areas where there is existing extractive interests. On the other hand, incentivizing extraction has been prioritised in comparison to other sectors of the national economy. For example, the permits to access sources of water for extractive uses have precedence over those for agricultural uses. In this same line, processes of environmental economic zoning which are part of the national policy of territorial organisation have been halted in those areas where the suggested use of land does not match the maps of mining expansion (Glave 2012).

The absence of a project greater than promoting extraction is evidenced by the developmentalist discourse of the Peruvian State. For the last decades, development has been equated with economic growth, assuming that the latter depends on extractive expansion. Since the extractive industry, particularly the mining industry, has been historically associated with environmental and social risks, there has been an attempt to consolidate the discourse of “responsible” mining as a driving force of development. Multinational mining corporations have played an important role in the consolidation of this image. Since their entrance into the country, these corporations have made great efforts to create an image of socio-environmental seriousness and responsibility in public opinion (Castillo 2006; Damonte 2006, 2016).

I believe there are four characteristics of the current Peruvian State that limit its capacity to design and carry out a development project that goes beyond the promotion of the extractive sector. Firstly, there is a lack of planification and execution of long-term growth policies designed specifically for the Peruvian State and by it. Developmental planning has not been a priority in the structure of the Peruvian State for decades. The National Center for Strategic Planification (CEPLAN – Centro Nacional de Planeamiento Estratégico) is of negligible importance within the state and its guidelines are rarely picked up by long-term policies. National policies are designed following global paradigms supported by multilateral organisations such as the World Bank and the International Monetary Fund. Thus, national policies change according to the requirements of global models. Legislation is usually an adaptation of global policy guidelines or of laws passed in other countries.

Secondly, the state has a very limited state bureaucracy unable to defend and sustain state initiatives. The Peruvian State is a long way from Weber’s classic definitions, according to which state bureaucracy ought to be an autonomous power (Weber 1922 [2002]). There is a high level of mobility of staff members between the state and private sector. State technocracy is lent for short periods of time to the state by the private sector. Middle range civil servants seek an improvement of their working conditions in the private sector, and most powerful positions in each government are filled by people coming from the private sector. Furthermore, the level of employee retention in middle and high range public positions is low, with ministers and vice-ministers being constantly changed. Nowadays it is very usual in Peru that newly appointed ministers arrive with a team of experts they take away with them when they leave the post. Consequently, continuity depends mainly on general policy guidelines established at the highest spheres of government, dominated by the extractive and economic sectors. Precisely these sectors are the exception, for they enjoy a certain bureaucratic continuity; their interests, however, are almost identical to those of the private business sector (Dargent 2012b).

Thirdly, there is a significant sectorial and territorial inequality with respect to the state’s capacities. Prioritised sectors — such as the economy and the extractive sector — possess more economic, technological, and human resources than the rest of the state’s sectors. This way, they have become “islands of efficiency” (Dargent 2011: 313–332, 2012; Vergara 2012), which grants them greater political force. As a result, they are able, for example, to promote extractive projects to the disadvantage of agricultural initiatives. While the offices of the Ministry for Energy and Mining can quickly gather data and process permits, farmers must go through farming offices with little systematised information and scarce trained personnel. In this sense, the recent creation of the Ministry for Environment in 2009 and the internal struggle of this sector to gain more political weight within the state constitute an interesting field of study.

From a territorial perspective, the inequality is even greater. On the one hand, there is an issue of scale: the state’s capacity and authority dilutes as the distance from the power centre becomes larger. This problem, common to many states, is worsened in the Peruvian case by an unfair territorial design inherent to the development of the state, and to the deficient decentralisation process of the last decade (Cotler et al., 2009). Consequently, state power and technical capacity are concentrated in the capital city and in a group of important cities, while the state’s presence in some rural areas is imperceptible. For instance, there are places in the Peruvian Amazon rainforest where the state arrived for the first time together with oiling companies in order to facilitate extractive projects (Walker 1987). On the other hand, territorial inequality is also differentiated by sectors. Thus, to push extraction in specific areas the state might improve its sectorial services while at the same time offering clearly deficient public services.

Fourthly and lastly, the Peruvian State has political contradictions that are sometimes reflected in the development of contradicting public policies. A clear sectorial case is the state policy concerning small-scale illegal mining in the Amazon jungle. While the Ministry for Energy and Mining has developed formalisation policies aimed at increasing taxation for this activity, the Ministry for Environment has sought to eradicate this activity through interdictions based on the enormous environmental damage caused by this activity in the fragile Amazonian ecosystem (Pachas 2011; Valencia 2014). These contradictions become more evident at a larger scale, where Regional Presidents openly defy national policies. An emblematic case is the social conflict surrounding the mining project of Conga in the Cajamarca region, where the Regional Presidency led a strike against the central government demanding the suspension of this large-scale mining project. The project had not only complied with the regulations of the central government, but it was also openly supported by the central power. The project was finally suspended (De Echave & Diez 2013; Zavaleta 2014).

Implementation and Reaction in the Decision-Making Process of the Extractive State

Despite the limitations of the Peruvian State, we cannot speak of a failed state, following the definition provided by Natasha Ezrow and Erica Frantz (2013). The State designs and implements public policies, offers public services of varying quality to most of its citizens, and exercises sovereignty over the national territory — except for some specific places in the Amazon rainforest— where illegal activities escape from the state’s control and authority. Therefore, it is interesting to ask how the Peruvian State works specifically with respect to the extractive sector. Analysing the contradictory way in which decisions are usually made, and the uneven manner in which different state levels govern, one might claim that the state’s actions are confusing and depend exclusively on the circumstances. However, I believe that there are characteristics of state functioning that can help us understand certain behaviour patterns. Thus, at least with respect to the extractive sector, I consider that the state’s agency is circumscribed by global political and economic structures. Hence state actions can be seen to a great extent as “implementation” processes initiated by society’s de facto powers and as “reactions” to social protest and mobilisation.

In the first place, the state that emerged from the neoliberal reforms seeks to play the role assigned to it by a global market dominated by private capital. As Susan Strange (1996) points out, neoliberal states abandon their aim of establishing autonomous policies to better adequate themselves to global market policies. In the extractive sector, this turn can be clearly observed in the promulgation of legislation aimed at facilitating transnationalization and privatisation (Aste 1997; Glave & Kuramoto 2007, 2002). These changes fostered the entrance of the main multinational extractive mining corporations into the national economy. These corporations allied themselves with national mining companies, rapidly achieving the dominance of the sector. Accordingly, the association of extractive companies in the country gained economic and political relevance, becoming an important de facto power in the land.

The state’s adequation to global guidelines of public policies did not only promote the arrival of transnational capital, but also a series of environmental and social initiatives pertaining to the global package of liberalisation policies (Mol 2002). On environmental issues, the international context decisively influenced the state’s acceptance of global protection policies that led to the creation of an environmental regulation system in the sector (Lanegra 2014). Similarly, the influence of multilateral organisations played a significant role in the implementation of recognition and participation policies in favour of indigenous peoples, such as the promulgation of the Prior Consultation Law (Ley de Consulta Previa) (Damonte & Glave 2014).

However, economic neoliberal reforms were clearly implemented with greater speed, efficiency, and profoundness than the environmental and social reforms. The initial and greater pressure exercised by multilateral organisations focused on market liberalisation in order to allow the entrance of global capital. Environmental or social concerns were understood as posterior or even subsidiary reforms with respect to market development. The Peruvian State understood this prioritisation and made it its own. This is reflected in the manner in which public policies are designed and implemented to this day in the country. The central government does not only circumscribe its actions to the principles of the market, but it also prioritises economic issues over political, environmental or social ones.

The insertion and adequation of the state to global market policies created the need to employ professionals who were able to understand and implement the reforms. Although this process of bureaucratic consolidation could not be fulfilled — due to the above-mentioned reasons — it did influence the way in which civil servants, especially those at high positions, understand their jobs. Public policy discussions within the state rarely question the global principles of market economy or the pre-eminence of economic grounds. This has as a consequence, for example, that in the extractive sector it is practically unimaginable to abandon a large mining project on non-economic grounds. In this sense, the state’s discourse rationality is confounded with (and subordinated to) the logic of private business.

In the second place, de facto powers of society — especially economic powers — pervade the state’s actions at different levels. In the extractive sector, corporations, large companies, and associations of mining and oiling businesspeople have the power to influence decisively on the design, promulgation, and implementation of public policies. Interestingly enough, extractive capitalists have not tried to occupy positions within the state (i.e. they have not tried to get themselves elected as authorities). Instead, they have chosen to pervade the state, in other words, to exercise pressure and influence on the state. A possible reason for this is the high political cost of governing in comparison to the relative autonomy afforded by the action of influencing authorities — such an autonomy is quite convenient in contexts of political instability. The influence of de facto powers in the extractive sector is nonetheless evident and verifiable though not always decisive.

The state is not only influenced by large extractive capital, but it also depends on them to govern remote areas where extractive activities take place. As James Ferguson and Akhil Gupta (2002) have shown, states often depend on businesses to indirectly exercise their sovereignty. The Peruvian State has historically relied on extractive corporations to solve, at least partially, its “legibility” problems, and to indirectly govern places that would otherwise remain as unknown and strange. This was the case with rubber enterprises in the past (Walker 1987), and it is still the case with some oiling and mining companies nowadays. The difference is that in the past the state had no capacity to reach remote areas, while the state today, being capable of reaching the national territory in its entirety, prefers to “outsource” certain government aspects to private extractive corporations. At extractive sites, corporations gather information to “read” the local society and establish themselves as economic and political actors in the region. Therefore, the state prefers to retreat from institutional spaces, leaving room for the development of social practises of corporate responsibility instead of developing public institutions (Bebbington 2010; Szablowski 2007). In this case, the “implementation” becomes interdependency.

In the third place, the Peruvian State’s actions have been shown to be “reactive” to social mobilisation, particularly in the decentralised units of government administration, such as Regions, Provinces and Districts. The extractive expansion, especially mining, has led to the multiplication of conflicts in Peru. Literature identifies the causes of conflict as the competition for resources and greater extractive revenues, the damage sustained by local forms of subsistence, and the growing social inequalities (Arellano, 2011a; 2011b; Barrantes, Zárate & Durand, 2005; Bebbington, 2012; De Echave et al., 2009; Salas, 2010; Paredes, 2006). As a result of this social explosion, the state has been forced not only to negotiate with local mobilised actors on the conditions of extraction, but also to revise its mining policy (De Echave et al., 2009).

Gradually, certain sectors of government have understood that neither repression nor “outsourcing” the exercise of government to corporations are sustainable strategies in the face of growing social mobilisation. In this context, the state has tried to strengthen its institutional presence without giving up the economic and political neoliberal principles. The greater state intervention can be observed, for example, in the strengthening of the autonomy of regulation of Environmental Impact Studies (EIA — Estudios de Impacto Ambiental) through the creation of the National Environmental Licensing Agency (SENACE — Servicio Nacional de Certificación Ambiental)1Before the creation of the autonomous Agency (SENACE) in 2012, the Environmental Impact Studies were approved by an office of the Ministry for Energy and Mining whose main objective was not to regulate, but to promote extractive investment., or through the recurring installation of roundtables led by the state and aimed at achieving the necessary social peace to keep the flux of mining investments going.

On these grounds, I consider that the state’s actions have been reactive to social mobilisation. Protests have had a clearly positive impact in the revision of specific policies and in the suspension of mining projects that were unable to achieve a minimal social licence (Bebbington et al., 2008). In some cases, such as Conga and Espinar,2I am referring to the conflict between the mining company Xstrata Tintaya and the surrounding communities that took place in 2012 due to reports of water pollution. Óscar Mollehuanca, then the Mayor of the Espinar District, was one of the main leaders of the protest. regional or municipal governments themselves have led the protests against the central government’s pro-extraction policies. Thus, protest and mobilisation become activating agents which can modify the relative weights within the state or counteract the influence of de facto powers in the sector. However, mobilised local and regional organisations are still unable to find a stable institutional space that articulates their demands in an alternate national agenda. Protest spills over, but it is not institutionalised beyond the area where it emerges, thus losing its transformative force (Damonte 2016).

Final Considerations

In Peru, the analysis of the state is once again becoming an important topic in the social agenda (Dargent 2012a; Dargent & Rousseau 2015). The economic dependency on extractive development, and the constant social conflicts within the sector have led to a critical rethinking of some of the policies implemented in the nineties. In this context, the debate concerning the viability of extractivist states has become an issue of growing interest (Bebbington & Humphreys Bebbington 2011; Damonte 2014; Orihuela 2013; Perla 2010; Thorp et al. 2012). This paper intends to contribute to this debate by pointing out not only the limitations of the neoliberal Peruvian State, but also the limitations of its form of governance.

The state model that consolidated based on the neoliberal reforms has not been able to establish a project for a country articulating extractive development with the general welfare of the population. The economic reforms, though successful in attracting transnational capital, were not accompanied by the construction of public institutions. The state relied on corporate actors to govern, while economic growth was prioritised over environmental concerns and social needs. This unequal development has produced a social discontent that threatens the economic growth dependent on extractivist expansion, leading the state to a political entrapment it can hardly escape from without trespassing the limits imposed by the model itself.

The lack of political capital, a programme of its own, and adequate public institutions has led the government to rely on private capital. In this sense, de facto powers of society have pervaded the state, limiting its autonomy even further. The government has set political limits on the state trying not to interfere in the markets, blindly assuming that only liberalisation policies can guarantee economic growth. Hence, public state interests are confused with private ones, generating an “absence” of state, which populations affected by extractive development resent.

In this context, the state has been unable to include those groups critical of extraction into institutional spaces of political debate. On the contrary, it has tried to criminalise mobilisations against extractive expansion, with negative results. The recurrence of this failed policy is a clear sign of the government’s institutional incapacity to find governance mechanisms which are not based on the discredit and repression of dissidence. Management of conflicts has been inefficient, at least in the extractive sector, because it is based on the assumption that the problem lies in the lack of information concerning regulations and benefits of extractive development. The government seeks to deny critical readings, while the state itself is unable to “read” (even less to include) the non-conformist sectors of society. Once again, the political and institutional limitations of a state model that submits itself to market rules become evident.

However, the fall of the authoritarian regime showed that Peruvian society cannot be governed by force. The most controversial extractive projects produced waves of recurring protests that destabilised the government, showing the limits of coercive policies. In these cases, the government has been forced to take a step back or even to reactively accept some points of the agenda of the opposition. Protests have shown their transformative potential before a state lacking autonomous institutions and policies that may include critical sectors. Conflict opens a possibility for institutional change which, however, closes due to the limits of the model. On the other hand, protest — particularly when it becomes recurrent — may have a negative effect on social institutions. If the state does not generate institutional spaces for the solution of conflicts, protests can spill over, becoming an institutionalised practice to approach the state.

In conclusion, the Peruvian extractive sector is a good example of how economic growth does not necessarily lead to institutional progress that provides sustainability to such growth. In this sense, the economic neoliberal reforms in Peru have fostered an economic growth that is barely sustainable from a social perspective. This legacy is hard to manage.


Damonte, Gerardo (2016). “Estado, gobierno y extractivismo en el Perú”. En Quero, Morgan (Coord.). El Perú en los inicios del siglo XXI. Cambios y continuidades desde las ciencias sociales. México DF: UNAM, pp. 13-28. 

  • 1
    Before the creation of the autonomous Agency (SENACE) in 2012, the Environmental Impact Studies were approved by an office of the Ministry for Energy and Mining whose main objective was not to regulate, but to promote extractive investment.
  • 2
    I am referring to the conflict between the mining company Xstrata Tintaya and the surrounding communities that took place in 2012 due to reports of water pollution. Óscar Mollehuanca, then the Mayor of the Espinar District, was one of the main leaders of the protest.
February 17, 2022

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Gerardo Damonte Valencia, »State, Government, and Extractivism in Peru«, CritUP [online], published online 17 February 2022, accessed on 5 October 2022 URL: https://www.critup.net/translations/state-government-and-extractivism-in-peru/;

Gerardo Damonte Valencia has an MA and PhD in Anthropology from Cornell University. He carries out research in the field of natural resources at the Group for the Analysis of Development (GRADE) along with his teaching position in the Department of Political Sciences at the Pontifical Catholic University in Peru.

Gerardo leads projects in three interrelated fields: extractive industries and rural society; local knowledge and climate change; and territories and social movements. The geographical focus of his work is Latin America, and in particular the Central Andes region.

Among his publications are “The Constitution of Political Actors: Peasant Communities and Mobilization in Bolivian and Peruvian Andes” (2008), as well as various articles on the social impacts of extractive development in the Andes.

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