Lally Weymouth :
Peruvian president to Trump:
‘You are lucky to have Latin America.'
The Post's Lally Weymouth talks to Pedro Pablo Kuczynski
on running his country and dealing with the U.S. president-elect.
To say that Pedro Pablo Kuczynski is prepared for his new job as Peru's president is an understatement. Kuczynski , 78, has been finance minister and prime minister; a technocrat at the International Monetary Fund and the World Bank; an investment banker and founder of a private-equity fund. Last year he relinquished his U.S. citizenship to run for president. A passionate believer in free trade, Kuczynski will square off against President-elect Donald Trump's protectionist stance while trying to stop a years-long conflict between mining companies — crucial to the nation's export economy — and the local communities where they excavate. He talked with The Washington Post's Lally Weymouth in Lima. Edited excerpts follow.
Q. You made some caustic remarks about President-elect Donald Trump during your campaign; you even joked that Peru would “grab a saw and cut” off relations with the United States if he won. How will his election affect the region?
A. I'd better tone down what I have been saying. There is a lot of uncertainty, especially with regard to Mexico. Everybody is worried about what is going to happen. The idea of the wall is completely crazy. I just don't understand how people continue talking about the Mexicans paying for this wall. I hope [his presidency] works out differently than what analysts expect, because the world needs a little peace and tranquility.
Q. You are coming to the U.S. in February?
A. I will come to the U.S. if the Congress here gives me permission. My old school, Princeton, is giving me a medal, which is called the James Madison Medal. If I am there, I will take the Metroliner down to Washington and say hello.
Q. Say hello to the new president?
A. Right. We have had a good relationship with the Obama administration.
Q. The question is, can you work out a good relationship with the new administration?
A. It depends a little bit on what their perception of Latin America is. If they think that Latin America is just a bunch of guys who climb walls to get illegal work, then it is not going to go well. I hope they go past that.
Q. What will you and Donald Trump say to each other when you meet?
A. The first thing I am going to try to explain to him is that the U.S. is not in the dumps because of Mexico. There is hardly any Mexican immigration into the U.S. today... I am going to tell him: “You are lucky you have Latin America. Sure, there are drugs and problems, that's true. But you have to look on the positive side. We are less uncivilized than you think. We actually make a big contribution to the U.S. We don't give you any real trouble. Latin immigration to the U.S. — sure, it should be done legally — makes a pretty positive contribution to the U.S. economy.” Also, if you look at the actual numbers, free-trade agreements have been pretty positive for the United States. How many car part plants in the Midwest depend on the Mexican market?
Q. At one point in your life, you were the CEO of the Central Bank of Peru. Then the military took over in a coup in 1968.
A. They wanted to know where the reserves were, and they forced me at gunpoint to open the safe. I showed them the few bricks of gold that were there. They said, “But that's not all the money!” Most of it was at the Federal Reserve Bank in New York. So they did not like me, and eventually they sent me to jail. Ultimately, I fled.
Q. How did you get out of jail?
A. I got out of jail with the help of some friends in the military.
Q. Then you went into the jungle?
A. We crossed through northern Peru into Ecuador.
Q. How long did that take?
A. Two or three weeks. We had an air force map and a compass. We got into Ecuador, and we walked and walked. In the end, we found a military base where they came and picked us up. I went back to Washington. I had [previously] worked at the World Bank, but the World Bank didn't want me because they said I was too political. So I went to the International Monetary Fund.
Q. Your first foreign trip as president was to China. Are you looking to Asia for growth because Trump is threatening trade barriers?
A. China is our biggest market. It is about 22 percent of Peruvian exports — mostly metals but also some sophisticated agricultural products. We have no issues with China the way others may have with [its claims in the South China Sea].
Q. You are trying to get the Chinese to invest here?
A. The Chinese have two huge copper mines here. They are looking at several other projects.
Q. If the U.S. opts out of the Trans-Pacific Partnership , will China move in and ask TPP countries to join its own Regional Comprehensive Economic Partnership?
A. Right. This is a group that will include India, which is important for us because India is the one country we don't have a trade treaty with. The idea we floated during the recent meeting of the Asia-Pacific Economic Cooperation (APEC) is that the Pacific Alliance countries — that is Mexico, Colombia, Peru, Chile — join the Free Trade Agreement of Asia and the Pacific (FTAAP). Basically, the FTAAP is the APEC countries without the U.S.
TPP was more ambitious, but it also had its detractors. It didn't include China, which is the bigger player in the Pacific. Also on pharmaceuticals, the period of tests would have gone from five to 10 years, which might have raised the cost of pharmaceuticals in countries like Peru. So there was some opposition to it. A lot of the business people here love TPP.
Q. How about yourself?
A. I don't love TPP so much. China is our biggest customer. So how can we support something that excludes them?
Q. You have a large informal economy.
A. It is about 40 percent of the economy and about 65 percent of the employment. If the businesses become legal, they will pay social security for their workers, and we will fill up the coffers of the pension funds a little bit. We will go down from an informal economy of 65 percent to 45 percent or 40 percent by the end of my government. If we are able to reach numbers like that, there will be a credit revolution here. The minute you become formal, you can borrow. So that will give us a big boost in growth without relying entirely on metals prices. We want to grow between 5 and 6 percent a year.
Q. Won't you also have to enact labor reforms so that employers can fire employees?
A. The constitutional court has said that you can fire people, but they have to stay in the company. We have to change that.
A. You appoint better people to the court. It is not like the U.S. Supreme Court where you stay until you die. Here you stay six years and then you're out.
Q. Several mines have been shut down over the past three administrations, and the situation is reportedly getting worse between the mine owners and the locals. What are you going to do to resolve these conflicts?
A. I am going in a few days to the Tia Maria mining district in the south on the coast to talk to folks there because they oppose the mine.
Q. You yourself are going?
A. I will sit in the town square. There is no water for irrigation because there is a drought, and people are ticked off, so we are building them a well. In the end, a lot of these mining conflicts boil down to water. The president has to be involved.
Q. Do you have to be tough?
A. You have to have an iron hand in a silken glove. You cannot start firing at people.
Q. It seems as if all the past presidents gave up —
A. I'm not like past presidents. None of them actually went to talk to the miners. I come from the mining industry. I used to run one of Alcoa's biggest mines.
Q. What do you plan to do about drug trafficking in your country, which is the second-largest cocaine producer in the world?
A. We have done quite a bit. We have started to clean up the police. We had over 80 generals in the police force; 40 were fired. We have also dismissed 1,000 police officers. The main thing we have to do with drugs is to give the people in the Valle de los Ríos Apurímac region — that's the major drug area — alternatives. They have to have roads, schools, electricity and jobs.
Q. How do you see the situation in Venezuela?
A. Totally terrible. [President Nicolás] Maduro is afraid that if he yields, they will hang him from a lamppost, so he wants to stick with it. There are many rumors that the army is heavily involved in drug trafficking. .?.?. We have to begin thinking about it before it explodes. First of all, you should have major humanitarian relief, which Maduro doesn't want. Second, you should have a transitional government for a year. Then you can have new elections once the boat is steady again.
Lally Weymouth is a senior associate editor for The Washington Post. Petroleumworld does not necessarily share these views.
Editor's Note: This commentary was originally published by The Washington Post on December 09, 2016. Twitter: @LallyWeymouth. Petroleumworld reprint this article in the interest of our readers. Link to original article .
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