Land bonds, peasant protest, and legitimacy in Puno

I spent part of this morning at a meeting of campesinos from throughout Puno region, who had gathered at the region’s First Agrarian Forum, titled “Causes and Consequences of the Agrarian Reform.” The event itself was organized by a group of regional peasant federations: a couple catch-all campesinos organizations, and some more specialized: one for indigenous women, one for participants in the informal sector.

The municipal auditorium was packed with indigenous campesinos, men and women, many sporting “traditional” dress (the usual panoply of hats and polleras). Some of the women had brought their babies with them; men were in the majority of attendees, and many of them were quite aged. I was in the standing section, and throughout the course of the meeting, those of us who were in the original standing contingent moved around the room as more and more people packed into the auditorium.


Forum attendants listen to speakers.
Photo credit: Devin Finn

Though it may not have been planned this way, the biggest issue up for “discussion, debate, and analysis” ended up being the Peruvian Supreme Court’s ruling on government payment of bonds issued to landholders whose properties were expropriated during Peru’s land reform 40 years ago. This polemical ruling, issued last week, saw furor over process, including public pressure from the President’s office to delay the ruling until the appointment of six more judges (these appointments ran into their own set of problems). The court snubbed these pronouncements by issuing its ruling anyway: the government would have to pay, but the payments need only be a fraction of what previous estimate pegged it at – perhaps 400 million, instead of perhaps 8 billion – and the government has considerable flexibility to repay in land or in new securities. Bondholders are, of course, unhappy.

So are government ministers, who have spoken out saying that paying out even 400 million could jeopardize social programs and other government obligations. Indeed, successive governments have refused to pay, arguing that payment would overstretch Peru’s treasury to an onerous extent. As the land reforms recede into memory, moreover, governments are less and less inclined to pay for actions undertaken by a military regime increasingly distant in time and in priorities from contemporary administrations. This is just as true for Ollanta Humala’s administration as for others in the past.

The issue of these bonds is even more confused than the paragraphs above would suggest, because of arguments (and, frankly, deliberate obfuscation) concerning who owns the bonds now. The investment companies that probably hold the majority have typically refused to comment on the allegations that they’re the majority bondholders. Peru’s Banco de Credito, holds just over a quarter-billion dollars worth of the bonds (although it’s unclear how much those will be worth now); there’s also a Peruvian association of bondholders in the mix, although it’s not entirely clear how many of the original landowners have held onto their bonds, and how many bonds have been sold in the secondary market.

But what was most fascinating to observe was how this issue played out at the grassroots level. This is just a snapshot, really, but it’s worth taking a brief look at how this is interpreted at local level.

The assembled men and women were not happy about the ruling. They view repayment of the debt as illegitimate, for one because of statutes of limitations on the payout (the court was mandating compliance with an older ruling, from 2001, which exceeds a supposed ten-year limit on judicial decisions in Peru). More importantly, those assembled repudiated the decision because of the perception that 400 million dollars, or whatever the final payout ends up as, should be spent on social welfare, and especially on developing the capacities of the intended beneficiaries of the land reform – campesinos like those assembled – who are not seen as having benefited from the original reform, or anything that came after it. The phrase used was paying the “social debt” – to Peru’s own citizens – before paying off debt to bondholders, especially of the foreign variety. The legal authority of the court in this case was presented as distinctly subsidiary to its forfeited moral authority.

Expressions of that illegitimacy took various forms, some of them fanciful, some less so. Successive speakers railed against supposed US colonization, seen in reports that accumulated interest to be added to the value of the bonds will use US Treasury interest as a benchmark (despite the fact that this is the most favorable possible interest for the Peruvian Treasury). They denied the existence of individual Peruvian bondholders, a negation which is incorrect, but which served the rhetorical representation of bond payouts as solely representing the interests of Gramercy Funds Management LLC and other “North American Capitalists.” They declared solidarity with Venezuela and Bolivia, allegedly allied projects of subaltern unity and struggle.

But on a deeper level, these anti-imperial posturings are epiphenomenal to a deep chasm between rural citizens of this remote corner of Peru and their supposed government representatives. This comes in at least two flavors. One is a deep sense of marginalization – as poor people, as workers of the land, as indigenous people, who have always been treated as second-class citizens. This has been reinforced by centuries of institutionalized racism, and speakers were quick to remind their audience of this legacy. One speaker reminded his audience of the illiteracy and rapacity of the pig-farming (and pig-importing!) Francisco Pizarro and made the case for reclaiming (alleged!) indigenous legacies of peaceful self-rule. Another contrasted Catholicism unfavorably with (presumed) Quechua and Aymara beliefs, then doubled down on the theme of autonomy by declaring that it was time for indigenous Peruvians to rule themselves.

The other “flavor” is more concrete, related to specific actions committed by official actors. Perhaps the most egregious example in this particular case is the failure of the Chief Justice of the Supreme Court to recuse himself from the bond ruling, despite his deep ties to the Banco de Credito, a major bondholder, and indeed despite holding bonds himself. Peru’s judiciary is the least trusted institution in the country, and one of the least trusted in the region. Cases like this, where the most powerful judge in the country is seen ruling in favor of himself and a former employer, and against the interests of the nation, both illustrate and perpetuate the narrative, which in turn feeds a larger narrative of citizen marginalization and lack of state accountability.

The antidote to marginalization, at least at this meeting and in this context, is mobilization. Multiple speakers called for a national strike against the bond ruling, to be held during Fiestas Patrias; I hope to write about this in a later post, but it’s hard to see this issue achieving that kind of salience in the national debate. It was, to be frank and perhaps a little sentimental, inspiring to have seen this kind of popular participation in action. Whatever the overreach of some of the analysis presented, the First Agrarian Forum saw a lot of people, often marginalized from the formal arenas of national politics, take the opportunity to present their points of view, and plan for concrete action. The Peruvian state is going to have to ultimately address the legitimacy gap that is so keenly felt by a great many of its citizens, regardless of how far they may be from the center of political life.

Later, after I had left the meeting, the audience spilled out of the auditorium to gather in the Plaza de Armas of Puno, repeating their demands and reiterating their resolve in the open air. It was startling to see the relatively small size of the crowd; in the confines of the municipal hall, their moral force made them appear as multitudes.

Note: this piece was updated July 23, around 10:30 AM Puno time to clarify some issues related to accumulated bond interest benchmarking.

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