Introduction: Prior to her appointment, Ms. Astete Rodriguez served at the rank of Ambassador at the sub-secretariat for economic affairs and international economic negotiations at the Ministry for Foreign Affairs of Peru since 2002. She served as Director for economic organizations at the sub-secretariat for multilateral and special affairs from 2000 to 2002.
A career diplomat, Ms. Astete Rodriguez was posted at the Permanent Mission of Peru to the Organization of American States in Washington from 1995 to 2000 at the rank of Minister. She served at Peru's Embassy in Ecuador from 1986 to 1992, first as a First Secretary and then as a Counsellor. From 1979 to 1982, she served as Third Secretary at Peru's Permanent Mission to the United Nations in New York. She has held a number of different posts at the Ministry for Foreign Affairs since she joined it in 1976.
During her career, Ms. Astete Rodriguez has represented her country at several international conferences and meetings. She has received a number of decorations. She obtained degrees in the science of communication in 1971, a degree in diplomacy in 1975, a degree in law in 1977, and a degree in international relations in 1978, all from Peruvian institutions. Born on March 30th 1952 in Puno, Peru, Ms. Astete Rodriguez has three children.
Daily Bell: First of all, let me start by thanking you for taking the time out of your busy schedule to assist my team with a macro level assessment of Peru's economic environment.
Elizabeth Astete Rodriguez: It's a pleasure to respond to your questions.
Daily Bell: In your position as Peruvian ambassador to Switzerland, what are some of your roles and responsibilities?
Elizabeth Astete Rodriguez: I'm honored to represent my country in Switzerland, and to maintain a close relationship with Swiss authorities, private institutions and the Swiss community interested in Peruvian issues. My main objective is to strengthen the bilateral links amongst our nations and to promote trade, investments, tourism and bilateral cooperation, as well as, a better knowledge of Peru's socio-economic environment, and the richness of its culture. Peru and Switzerland enjoy a very good level of bilateral relations, but there is a high level of potential still to be developed. In this context during the last three and a half years I have been invited to talk about Peru to different institutions around Switzerland, and fostered a variety of bilateral projects by working closely with the Departments of Foreign Affairs, Culture, Justice and Civil Protection, among others.
Daily Bell: Your President Alan Garcia, who appears to be a free-market thinker, has said that he has "complete faith in human intelligence and technology to overcome any obstacle, geographic or social … (it's) the process of individualization of decisions, communications that makes humanity more free." I understand that the Swiss government has recently earmarked Peru as a top destination for business development in Latin America and the recipient of $50 million of Swiss government development capital over the next three years. No doubt President Garcia's attitude toward the marketplace encouraged this sort of funding. What are some of the other variables that led to that positive assessment and the willingness for the Swiss government to invest in Peru?
Elizabeth Astete Rodriguez: Swiss cooperation initiatives have been very successful in Peru. Our authorities and population have a high appreciation of their quality and influence to develop national capacities in sectors such as poverty reduction, governance and trade and tourism; endeavors that match perfectly with our efforts to improve productivity and efficiency in the process of integration to the international markets. I believe Swiss authorities have acknowledged the serious policies and measures undertaken by Peru in the last decade to strengthen democratic institutions and to maintain sound economic, monetary and fiscal policies, a positive environment to foreign and national investmentors and a coherent framework to improve and diversify exports and to reduce poverty. As we have finished the negotiation of a free trade agreement, and we are trade partners, I am certain Swiss authorities recognize Peru as a developing country with high growth potential and a strong commitment to sustainable development and a more inclusive society.
I'm very pleased with the decision of the Swiss Government to increase significantly the budget for cooperation projects in Peru through Seco, particularly in trade, economic, tourism and institutional issues. I am certain the positive impact of Swiss cooperation in my country will be even more relevant in the coming years because, as an emerging economy with strong macroeconomic performance and concrete achievements in the fight against poverty and regionalization, we are in a better position to have the complementary resources needed to work more efficiently and drive the success of the program.
Daily Bell: In an interview with the Peruvian Times, your president was quoted as saying "… the nation's promotion of its foreign currency debt to investment grade by Fitch Ratings … puts Peru on a footing with Chile, the only other South American country to achieve investment grade status. …" The Peruvian Times went on to say, "Peru has been lauded for maintaining tight reigns on its fiscal policy amid record economic expansion on strong international commodity prices, with its mining, and a surge in the domestic economy." Given this increased financial discipline, what kinds of development projects is the Peruvian government most interested in advancing?
Elizabeth Astete Rodriguez: One of the main reasons of the impressive results obtained by Peru over the last few years has been the continuity of sound economic policies, macroeconomic stability, favorable investment climate, regardless of changes in governments. Peruvian authorities are aware of the importance of investments for development. We have signed 32 investment agreements worldwide. We are members of ICSID and MIGA to give investors the confidence to solve any future disagreement in an independent tribunal, and we have just acceded to the OECD "Declaration on International Investment and Multinational Enterprises" thanks to the support of the member states which recognize the commitment of Peru to promote foreign investments. Peru stands first in Latin America in protecting investments, and there is a clear conviction we need them if we want to succeed in developing the huge potential of the country and fighting poverty in an effective way. We want to be winners in the globalization process, and we already know from experience the kind of policies we have to avoid. The nationalization of companies in Peru did not work in the past.
Daily Bell: Are there any protections afforded by the World Bank, or other international agencies, in the form of loan guarantees to investors seeking to fund development projects in Peru?
Elizabeth Astete Rodriguez: Yes, we have excellent relations with international financial organizations and I understand we have the possibility to get loan guarantees to investors through ICF of the World Bank, the Inter American Bank, only to mention a couple of them.
Daily Bell: One industry I am familiar with is the mining sector and its vital importance to Peru. There are many international companies that have successfully been doing large-scale mining for many years in Peru, such as Newmont Mining and Barrick Gold. And of course, Peru is a very natural resource-rich country. Most recently, on March 3rd, 2009 at the Prospectors and Developers Association of Canada's (PDAC) annual conference, Peru was hailed as a mining success story. A sustained effort by successive governments to attract foreign investment to Peru's mineral sector over the past decade has transformed the South American nation into the world's largest silver producer, the second or third largest copper producer in the world, and South America's largest producer of gold, zinc and lead. Do you expect to see continued support for environmentally responsible development projects undertaken by companies that are working cooperatively with local communities to advance many of the more isolated regions of the country where high levels of illiteracy and poor living conditions exist?
Elizabeth Astete Rodriguez: Peru is committed towards sustainable development, pursuing opportunities that promote the growth of our nation, with sound environmental policies and respect for local communities. This must be a shared responsibility of the national government, regional and local authorities, as well as international and national mining companies. We are witnessing a bigger commitment from mining companies with regards to environmental concerns and social corporate responsibility, and we hope poor local communities will be able to get a direct improvement in their socio-economic and environmental situation in the near future. We hope that efforts to strengthen regionalization and to work closely with the private sector and local communities will help improve opportunities for all involved.
Daily Bell: Obviously the mining industry, worldwide, is taking notice. Here's a quote from the PDAC: "More than 80 companies are active in Peru, thanks in part to an investment climate that has been granted investment-grade status by two of the world's main international credit rating agencies. This achievement is in marked contrast to that of some of its neighbors, notably Bolivia, Ecuador and Venezuela, where nationalist policies have deterred or curtailed foreign investment. Peru's stable investment climate has also encouraged investments in social projects aimed at raising the standard of living for all citizens." What would you say to anyone concerned about the stability of Peru's economy or its government?
Elizabeth Astete Rodriguez: Peru is a democratic country, with a free press and independent powers. We are making strong efforts to strengthen our institutions, to improve education and opportunities for our people, to fight corruption and poverty and to respect human rights and the rule of law. There is a clear commitment to develop our rich natural and human resources through an open economy and sound macroeconomic policies to maintain growth, improve national integration and to achieve a sustainable development and a better productivity. In the last few years, we have adopted many important national and international commitments and we have been improving our laws, regulations and procedures to be more efficient and we will continue to do so. We are active members of WTO and we have signed a wide range of bilateral trade and investment agreements with the purpose to offer economic stability to attract foreign investments and to increase production and exports. Besides, the country has achieved in the last years a sustained growth, a high level of international monetary reserves, a low external debt, low inflation, growing levels of investment, a rise in commercial exchange, a good fiscal position, increased tax revenues, and a growing internal demand, and many other positive results that we intend to maintain and increase in the future.
Daily Bell: In summary, what do you expect to see over the next several years, in terms of economic growth, in Peru?
Elizabeth Astete Rodriguez: Peru has had a sustainable growth of over 5% since 2002. In 2008 we led economic performance in Latin America with a growth of 9.3% of GDP, which was preceded by 9% growth in 2007 and 7.6% in 2006. The projections made by international institutions, and the Ministry of Economy, were recently reduced because of the magnitude of the international economic crisis, and now we expect a 5% growth in 2009, and 6% in 2010 and 2011, respectively, amounts which show an important reduction from 2008, but are still considered very good in comparison to other countries, specially due to the fact that most of the world and Latin America will face recession during the coming months, and hopefully not, years.
Daily Bell: Thank you for providing us with some valuable insights into Peru. The information along with Peru's progress is most impressive.
With all that is going on today in the world, it is wonderful to speak to an ambassador from a country where the president appears to believe in free markets. Not only that, but Peru is a country with a long tradition of gold mining and respect for precious metals. Peru is therefore a success story, unlike countries that get much more attention such as Venezuela and Brazil and, of course, Cuba.
For some reason it seems that socialist countries get all the attention, yet socialism is always destructive. Such environments inevitably contain the seeds of impoverishment because they deprive society of the necessary calculus to determine what is profitable and what is not. If the marketplace cannot properly value contributions and products, then there is no way to know what is useful. Society's contributions will eventually become misaligned and increasingly useless.
This process is neither insignificant nor irrelevant. Here in the West, we are living through a realignment of resources brought on by just such a lack of appropriate valuation. Central banking itself is the problem in that the overprinting of paper money brought on a boom leading to a bust. During the boom, businesspeople were fooled into investing in various products and services that would ultimately prove to be less valuable than they seemed. Now, as the flood of paper money subsides and a detritus of ruined investments becomes increasingly clear, the only solution is to take the losses and start over.
Such dislocation may never be totally avoided in capitalistic society, but it can be ameliorated by fidelity to the market and respect for risk and hard work. Obviously, this is what is going on in Peru today. The country has a long history of achievement; its people are master builders who created great cities and kept track of massive trade, even hundreds of years ago. Their agricultural accomplishments are superb and their craftsmanship remains sought after. With such a basis of accomplishment, it is no wonder that Peru is on the rise in South America where other countries seem to be going in the other direction.
So many countries, in fact, have chosen paths that will inevitably lead to more suffering and economic instability. We have mentioned three above, but there is also Argentina, once a most prosperous and successful country, but now lurching from crisis to crisis. It is saddening that the virus of socialism continues to survive and prosper. We understand its presence in Africa, given the massive amount of aid pouring in from Western countries into corrupt governments there. But so many South American cultures and societies have the sophistication to do so much better. Experiments in free-markets have produced great prosperity over and over in South America. In the past, Venezuela itself has prospered, as has Mexico, Brazil and of course Argentina. To see such countries go off the rails is saddening.
There are bright spots, of course. Colombia has risen up as a result of the application of free-market competition. We can see what this sort of application is doing for Peru, and even many long-suffering regimes in Central America have begun to allow their citizens the benefit of their own labor.
But even as we admire the free-market spirit of today's Peruvians, we note that the West itself is not immune from the socialist virus that has attacked other countries in the region. The financial crisis of the West, itself caused by banking socialism, is being treated with more socialism – increased regulation and a crackdown on economic freedom generally. We notice this happening in such countries as Switzerland, which are now attacked by great Western powers. Ironically, as the West continues its decline, countries like Peru that are willing to use the tools of the marketplace will continue to prosper.
Asian countries, too, are free-market friendly – even, astonishingly, China. Eventually, if trends continue, we could see a host of new countries rise up with newfound wealth and power as a result of the power of the marketplace. The recipe, in fact, for prosperity is well known. It simply takes the kind of determination and graciousness that the Peruvian political class is showing to light the spark that can lead to a wealth-conflagration. As the interview above shows, not only is Peru headed in the right direction, but its experience and success has something to teach the rest of the world. We hope others are listening. Peru has much to teach us.
