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Peru: Protests in Pucallpa Against Increased Fuel Tax

This past week, the extradition request for ex-president Alberto Fujimori was denied by a Chilean judge, the country where he is currently located. This news proved to provide quite an impact and although, the ruling will be appealed to the Chilean Supreme Court, it appears that the final outcome will not be wha had been hoped for. Maxwell A. Cameron writes about this in post “Ignorant Justice” on the blog Peru Election 2006.

The decision of Chilean judge Orlando Alvarez to dismiss Peru’s request to extradite former President Alberto Fujimori betrays remarkable ignorance about the nature of the civil-military regime that operated in Peru between 1990 and 2000. The ruling sparked outrage in Peru and around the world, leading to criticism by Amnesty International, Human Rights Watch, the Washington Office on Latin America, and Peruvian human rights umbrella group APRODEH. Disgust was also expressed by Peruvian bloggers, many of whom can be found here.

In other news, the wave of strikes and protests has not allowed the country to rest. Solutions were found to the strike of various days in Yurimaguas and the one in Iquitos, which was stopped before it had even started (there was 2 days of strikes, but the indefinite strike never materialized). However, the city that experienced a strike, which turned into something very serious, took place in Pucallpa or the region of Ucayali. Unfortunately, few blogs wrote about the issue and many of them just repeated the news that came out in the media. However, two posts caught my attention, one from Gran Combo Club [ES] called Defending the Tax Exonerations [ES] (the reason for the strike), where the topic was discussed:

Las protestas ante algunas medidas llegan con retardo, pero llegan. El tema viene de antes y sólo ahora, con algo de retardo, viene la resistencia a la eliminación de las exoneraciones. En su momento, el anuncio de la eliminación de las exoneraciones en la selva generó una ola especulativa en la selva (ver ¿Lucho Carranza=César Vásquez Bazán?). No generó protestas inmediatamente. Pero ahí las tenemos. A veces quien lleva a cabo una medida de política económica ignora las reacciones que esta medida generan. Como quienes se encargan del orden público son otros, puede ser que no se incorpore al cálculo costo-beneficio que la medida genera. Stackelberg nos dio el criterio de incorporar la reacción de nuestro oponente cuando se decide sobre una acción. No suena a que en un país tan conflictivo se haya tomado en cuenta la reacción de las regiones.

The protests against these measures were delayed, but they still arrived. This topic had been raised before, but only now after some delay, did this resistance to the elimination of the exonerations appear. At this time, this announcement produced a wave of speculation (see Lucho Carranza-César Vásquez Bazán?) This did not cause these protests immediately, but now they have arrived. Sometimes those that make economic policy decisions do not take into account the cost-benefit calculations that these decisions produce. Stackelberg provides us with criteria in taking into account our opponent's reactions to a decision. It doesn't appear that in a country in conflict that these regional reactions were taken into consideration.

Another post is “Alan, React! [ES]” of the blog Sin Azucar [ES] and touches on the topic from a less academic perspective, and more for ordinary people. As the previous post focuses on the issue from the officials to the competent (or incompetent) ministries, and of the macroeconomy. Kat, the blogger from Sin Azucar [ES] talks about what is happening now, where the head of households are furious to be personally implicated, since their families live in that city and have lost the ability to communicate with their families because of the strike radicalization in the normally calm and beautiful city of Pucallpa.

Hace algunos años … el gobierno decretó que la amazonía estaría exonerada de impuestos respecto del combustible. Sin embargo, como en toda situación, ese hecho fue aprovechado para realizar el tráfico de combustible hacia Lima, ya que la ganancia en masa por diferencia centesimal podría volver millonario a cualquiera. … Lo cierto es que el gobierno, en vez de realizar un seguimiento y capturar a los culpables decidió quitarle los beneficios a la selva. Eso significaría que el costo de vida de Ucayali sería como el de Lima, pero la producción seguiría siendo como la que tenía. Lo curioso es que Ucayali es uno de los departamentos que más tributa al estado. Y el pueblo ha decidido simplemente no dejarse bajar los pantalones y actuar como hizo Iquitos. Los iquiteños alzaron su voz de protesta y no se les quitó la exoneración. No obstante los demás departamentos si están enfrentando este problema. Ello acarrea muchas pérdidas, que sumadas al paro de Ucayali significan 12 millones de soles de pérdidas diarias ya que no funciona absolutamente nada. Ya han muerto 4 personas. La ciudad parece un pueblo fantasma y poco a poco la comunicación vía internet y teléfono se hace cada vez más esporádica.

A few years ago, the government issued a decree that the Amazon region will be exonerated from taxes on fuel. However, just as in all situations, this was taken advantage of by individuals that wanted take part in the fuel trafficking to Lima, now that the mass profits due to the decimal difference in price can transform anyone into a millionaire. The government instead of following-up and arresting the guilty individuals, decided to take away this benefit to the jungle region. This means that the cost of living for those in Ucayali will be the same as those living in Lima, even though the production will remain the same. It is interesting to note that Ucayali is one of the departments that contributes the most taxes to the state. The people simply had decided not to drop their pants and decided to follow Iquitos’ example. The people of Iquitos raised their voices in protest and they did not take away the exoneration. Other departments are facing this problem, which means much loss. The Ucayali strike means 12 million soles in daily losses because this does not work at all. Four people have already died and the city looks like a ghost town. Communication via internet and telephone is become more and more sporadic.

Other past articles about how the strike developed can be found at Útero de Marita [ES], whose author was in Purús (Ucayali), covering the news and wrote about the negotiations between the government and the strike leaders in his post “From Pucallpazo [ES]”. Enlace Nacional [ES] also published various videos about the Pucallpa strike, and did the same with the national teachers strikes from SUTEP (Education Workers Union of Peru) in this other special post.

Translation by Eduardo Avila 

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