De Soto says Fujimori backs Peru anti-poverty plan

LIMA Thu May 26, 2011 7:15pm EDT

1 of 2. Peru's Presidential candidate Keiko Fujimori greets supporters during a rally in the outskirts of Lima May 26, 2011.

Credit: Reuters/Enrique Castro-Mendivil

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LIMA (Reuters) - Renowned economist Hernando de Soto said on Thursday presidential candidate Keiko Fujimori backs anti-poverty programs he has implemented around the world and that they will help Peru avert nagging social conflicts.

De Soto, who is advising Fujimori through his Lima-based Institute for Liberty and Democracy, is well-known in development circles for his work on extending property rights to the poor and getting them access to credit.

He says the last two governments have largely failed to implement policies that address poverty reduction and aim to bring workers into the formal economy.

Fujimori faces Ollanta Humala in a June 5 run-off. They beat three seasoned moderates in first-round voting on April 10, partly as poor voters demanded inclusion in the country's economic boom.

"This Peru is knocking on the door of the public's conscience and it is saying I am not happy because I am not participating," said de Soto who has advised current President Alan Garcia as well as Keiko Fujimori's father, jailed former president Alberto Fujimori.

Peru is one of the world's fastest-growing economies, but still has a high poverty rate, estimated at 31 percent of the population.

The failure of Peru's growing wealth to reach rural provinces is partly responsible for some 200 protests that have broken out against proposed mining and energy projects expected to bring $40 billion in foreign investment to the Andean country over the next decade.

Complicating matters, residents of Peru's resource-rich Amazon region are without property rights and unable to form businesses, obtain credit, or access lucrative international markets through Peru's free-trade agreements, de Soto added.

He said Humala's proposal to fight poverty largely depends on raising salaries for sectors that are neither salaried nor unionized.

"It's a plan that does not address Peru's problems, Keiko (Fujimori's) plan takes account of this complexity," he said.

In addition to entering the formal economy, de Soto said rural populations must have a larger role in government as well as a greater say in extractive industries on their lands.

Peru's next Congress will likely vote on a law proposal both candidates support affirming the right of communities to such a consultation with firms, which is also codified in a U.N. treaty on indigenous rights Peru signed.

"Our position is that not enough consultation rights are established by the treaty," de Soto said. Communities "must not be just passive recipients of what is proposed in Lima but also have a say themselves in what happens on their lands.

Such participation would not affect foreign investment in the mining and energy sector, he added.

De Soto, who has advised governments around the world, said he was not eyeing a position in a potential Fujimori government, and said he had not had contact with the elder Fujimori since 1992 -- two years into his 10-year rule that ended in a cloud of corruption allegations and charges of human rights abuses.

"Our idea would be to help Keiko in the way she wants if she wins, but not necessarily to get lost in a bureaucratic apparatus," he said.

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