Who owns the basement? Peru and constitutional surgery – 07/21/2021 – Latinoamérica21

The constitutional reform, central element of the campaign of the elected candidate Pedro Castillo, endorsed in recent declarations, is however, in view of the mobilization of opposing sectors (mainly based in the capital), an unrealistic idea or, at least, which has a very high cost scope. Therefore, the new government faces a major challenge: whether or not to implement the convening of a Constituent Assembly to reform the constitution.

This discussion is part of the debate on the failure of the extractive policies applied over the past 30 years, which have brought neither economic nor social benefits to the populations around mining projects in the mountains, nor to gas and oil projects in the the jungle. In this scenario, could a constitutional change really contribute to a more equitable distribution of resources?


Much of the Peruvian economic model is based on reforms implemented in the early 1990s. Under the Fujimori government, the “Agrarian Reform Law”, approved under the Velasco Alvarado government (1968-1972), was repealed and market mechanisms introduced that were encouraged. private export agriculture, which produced a considerable return to the economy. This policy, however, has concentrated wealth in a few hands and has generated greater economic and social exclusion in affected communities due to lack of access to credit mechanisms and technology.

During these years, reforms were also introduced to liberalize the sale and marketing of land, including land returned through land reform, ignoring the conditions of peasant and indigenous communities. In fact, additional conditions for access to credit were introduced, which ultimately benefited a small formal sector of the economy. These laws, as well as the constitutional definition that some “unused” peasant and indigenous land must be returned to the state for “sale”, have led to the exclusion of nearly 600,000 peasants and indigenous peoples from the market. .


Another of the pro-market reforms implemented was that which made all natural resources the heritage of the nation, including the ownership of the subsoil. Thus, the elites who have reigned over the past three decades have appropriated extractive resources, ceding them in concession, while excluding the communities who inhabited the territories where they were located.

It is no coincidence that in May of this year, conflicts over land, mining and oil exploration accounted for more than 70% -124 out of 191 – of all conflicts, according to the Mediator. This is one of the main problems of the country which, if not addressed through the formulation of new policies, could lead to continued ungovernability.

In this context, several fronts are pushing the elected president to carry out his proposal for constitutional change. His own party, Free Peru, as well as his caucus publicly pressure him not to deviate from his original ideology. But on the other hand, there is a growing opposition that views constitutional change with suspicion as a measure to perpetuate itself in power. Therefore, in order to avoid a confrontation that could jeopardize the continuity of government, it is necessary to propose a realistic solution to the historical problem of peasant and indigenous land ownership.

The current model determines that it is the state that must provide public services to indigenous peoples and communities whose resources are exploited through concessions. But since Lima, communities have been accused of “hindering private investment”. In addition, communities do not have the legal tools to derive direct income from the exploitation of their resources, much less to participate as entrepreneurs in this activity. And royalties are far from being real tools for strengthening communities, because they are simple money transfers, but they do not integrate them into the company.

The basic problem remains the legal framework which does not allow the communities to carry out economic transactions of purchase and sale, nor to obtain direct income from the exploitation of their resources. Peru has great shortcomings in building a strong market and promoting wealth, which contrasts with what is happening in some developed countries with the presence of indigenous communities. In Canada and the United States, indigenous communities own the resources and, as such, can negotiate directly with the state or multinational companies and receive direct compensation for the use of their resources.

As the constitutional discussion approaches, the new government must find viable solutions. Whether it be through a new constitution, something that seems distant, or through constitutional “surgery”, which might have broad support. It is obvious that this type of “surgery” is not enough to guarantee success, nor to immediately generate wealth. Therefore, a key resource that could accompany a possible referendum on subsoil ownership would be to consider government involvement at different levels to channel agreements. This is particularly relevant in a mountainous country, where extractive activities in upper watersheds have significant repercussions in other regions, which could lead to new conflicts.

The proposal for a constitutional referendum also carries risks. The proliferation of mining activities in a country with a state unable to control such activities could lead to even greater disaster. Therefore, this scenario would require a detailed review of the limits and scope of exploration agreements between private parties, so that the state continues to play the leading role. To this end, the capacities of key actors such as OEFA, the Ministry of the Environment and the Ministry of Energy and Mines must be strengthened and must exercise strict control.

In short, the elected president, Pedro Castillo, must rethink who owns the underground in a country of the poor. Perhaps what could stop the conflict and change the history of peasant and indigenous communities in Peru is to review the transfer of rights to the subsoil.

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