MercoPress. South Atlantic News Agency

People's power

A delegation of Peruvian cabinet ministers and local elected officials from the city of Arequipa reached an agreement suspending the controversial privatization of public utilities that triggered a week of violent protests in the south of Peru.

A High Level Committee agreed to end the state of emergency in Arequipa and suspend the privatization process of Egasa y Egesur, local electricity generating and distribution companies, which had been sold to a Belgian consortium in 167 million US dollars.

Last Sunday President Alejandro Toledo declared the state of emergency and sent hundreds of troops in an unsuccessful attempt to end the violent demonstrations and damage to property when thousands of Arequipa residents took the streets. One local resident was killed and hundreds wounded.

In an open letter to the people of Arquipa, Peru's vicepresident Raúl Diez Canseco apologized in the name of President Toledo's ten months administration for not having honored their word regarding the non privatization of public utilities belonging to the city.

"We never imagined we would receive a smoldered government", and "we needed the funds to help recover the country and the economy", admitted Mr. Diez Canseco. The vicepresident also apologized publicly to all elected officials of Arequipa who were described by the Justice and Home Ministers as "useful cretins" for leading the protests against the privatization process.

Other points of the agreement include a truce until Justice decides on a demand appeal from Arequipa city officials and residents regarding the sale of the companies to the Belgian consortium.

The possibility of holding a referendum on the issue was also included in the deal identified as the "Arequipa Declaration".

Finally the state of emergency will be lifted next Friday and local officials commit themselves to calm protestors and condemn all those violent actions contrary to peace and democratic stability.

The High Level Committee was created following a suggestion from the city's Archbishop and included the Ministers of Industry, Foreign Affairs, Defence, Public Health and Education.

Although the peaceful and negotiated outcome of the confrontation was hailed in Arequipa as a political plus, analysts in Lima have a different view and are concerned about the long term consequences for the current administration since Mr. Toledo's "human" privatization policy, --strongly supported by the World Bank--, has received a head on blow, adding another set back to the president's rapidly deteriorating popularity. "Human" privatization policy basically means no redundancies and no shock increase in public utilities rates, as happened with most privatization processes in the rest of Latinamerica.