Leftist Humala vows growth will reach poor in Peru

LIMA Thu Jul 28, 2011 2:23pm EDT

1 of 2. Peru's President-elect Ollanta Humala and his wife Nadine Heredia wave as they arrive at the foreign ministry for a ceremony before being sworn into office, in Lima July 28, 2011.

Credit: Reuters/Jack Ramon-ANDINA/Handout

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LIMA (Reuters) - Peru's leftist President Ollanta Humala promised on Thursday to ensure the poor take part in the country's economic boom and sought to show investors he will govern as a moderate who has abandoned his radical past.

The former army commander vowed to keep existing free-market economic and trade policies intact while providing a minimum pension for all Peruvians over age 65 and raising the minimum wage.

He said social programs will be financed in part by a new tax on the windfall profits of companies in Peru's vast mining sector.

"We want the term 'social exclusion' to disappear from our language and lives forever," Humala said in his first speech after being sworn in as leader of one of the world's fastest-growing economies.

"Economic growth and social inclusion will march together," said Humala, who has distanced himself from his former mentor, fiery Venezuelan leader Hugo Chavez, to chart what he calls his own path. His economic team will be led by conservative economists.

In an acknowledgment his Gana Peru party lacks a majority in Congress, he promised to be conciliatory and seek dialogue to win approval for social programs.

But Humala, 49, caused a commotion in Congress by swearing to uphold the constitution of 1979 instead of a revised charter introduced in 1993 by former President Alberto Fujimori, who unilaterally shut down Congress to consolidate power.

"Go home now!" shouted legislators from Fujimori's party, the second-largest bloc in Congress after Gana Peru.

Humala said the 1979 constitution "is truly an inspiration for liberty and democracy."

He has tried to distinguish himself from his predecessor Alan Garcia, who lured billions in investment to Peru but was criticized for leaving a third of Peruvians mired in poverty.

Humala won a run-off election on June 5 by narrowly defeating Keiko Fujimori, the daughter of the former president who has been in prison since 2007 for corruption and human rights crimes stemming from a crackdown on insurgents.

A poll taken two weeks after Humala was elected showed he had an approval rating of 70 percent and that most voters thought he would pursue moderate policies. His rating later sank to 41 percent, prompting him to appoint business-friendly technocrats to his cabinet.

SOCIAL CONFLICT AND INVESTMENTS

Humala said the state must do more to guarantee rural communities share direct benefits from new mining and oil projects and that Peru's natural gas should supply fuel to consumers before being exported.

Peru expects $50 billion in investments in natural resources projects over the next decade. But social conflicts between companies and poor towns over pollution, water supplies and profits have delayed investments.

Humala has promised to mediate more than 200 conflicts in communities near mines and oil fields. Peru's human rights agency says nearly 100 people have died in the last three years in clashes between protesters and police in rural towns.

"Natural resources will be respected and projects conditioned on respect for communities, workers and the environment," he said. "The windfall profits of companies should contribute to the national fight against poverty."

In some isolated communities, farmers have turned to planting coca, used to make cocaine. Peru is now the world's top coca grower, according to the United Nations.

Humala said he would step up efforts to curb drug trafficking and called on consumer countries to contribute to the effort.

"We are going to turn illegal coca growers into participants in the formal economy," he said without providing details.

(Reporting by Terry Wade; Editing by John O'Callaghan)

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