Cutting extreme poverty a piece of Peru conflict puzzle

LIMA Tue May 29, 2012 6:15pm EDT

Carolina Trivelli, Peru's minister of development and social inclusion, gives an interview during the Reuters Latam Summit 2012 in Lima May 29, 2012. REUTERS/Mariana Bazo

Carolina Trivelli, Peru's minister of development and social inclusion, gives an interview during the Reuters Latam Summit 2012 in Lima May 29, 2012.

Credit: Reuters/Mariana Bazo

LIMA (Reuters) - Peru's expanding social programs will sharply cut extreme poverty, but will not be enough to promptly end debilitating social conflicts in provinces rich in natural resources, a Cabinet official said Tuesday.

Minister of Development and Social Inclusion Carolina Trivelli, who is building up a social safety net in rural areas long ignored by the state, said ensuring people have access to basic goods like food, healthcare and water will provide a baseline of relief before development and conflict resolution can occur.

"With this we probably won't resolve social protests, but it's the first thing we have to do - make sure all Peruvians can access public services they are entitled to," she said. "The only way to deal with social protests is systematically."

Social tensions returned to the fore in Peru this week when one of hundreds of disputes over the spoils of natural resources turned violent as protesters demanded global miner Xstrata XTA.L donate more cash to a small town in the mountainous southern region of Cusco.

Two people were killed when police tried to clear roadblocks, prompting President Ollanta Humala's government to impose emergency rules to re-establish order. Critics said Humala, who created the social inclusion ministry after taking office in July to reflect new priorities, gave up on mediation too fast.

"The social conflicts are very complicated. The causes range from very clear environmental concerns about pollution or the loss of access to natural resources like water, to political motives and the chance to capture a bigger piece of profits," Trivelli told the Reuters Latin America Investment Summit.

Two-thirds of rural Peruvians are poor and live in provinces, where most of the country's $50 billion in pending mining investments are being directed. They have largely been left behind by the country's decade-long economic boom. That has sown the seeds of discontent.

"Rural poverty is nearly 60 percent and extreme poverty in rural areas is 23 percent. These numbers concern us. That is where the conflicts are centered and our integration and national development efforts are focused there too," she said.

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Rural poverty has stayed stubbornly high even as the overall poverty rate plummeted 25 percentage points since 2004 to 30.8 percent. New data for 2011, to be published on Wednesday by Peru's statistics agency, is expected to show substantial declines in the poverty rate, with people in urban slums benefiting most, Trivelli said.

"For each point of GDP growth, poverty in Lima falls 2.5 points, but in the mountains it only falls half a point," she said.

Cabinet insiders say Humala regards Trivelli and Finance Minister Luis Miguel Castilla, a favorite among investors, as his most important ministers. They form a team Humala hopes will allow him to implement a style of politics borrowed from former Brazilian president Luiz Inacio Lula da Silva.

Humala has praised Lula for twinning healthy growth and private investment with effective poverty reduction after years of disappointing results on both fronts by previous leaders.

Parts of rural Peru are so isolated that small farmers cannot get their crops to market and if they do they can only sell them for a pittance.

Peru's government has tried to expand the country's road network by selling concessions to private companies, and by leaning on telephone companies to expand coverage in underserved areas.

Humala has boosted spending this year for the five programs Trivelli manages by 36 percent.

Her programs include nutrition, infant care, a pension program for extremely poor people over 65 and the pre-existing Juntos, which gives small amounts of cash to rural families that keep their children in school and have them vaccinated.

Peru's persistently high poverty rates have bedeviled social scientists for decades.

Some say historical institutions have undermined development to the present day. Melissa Dell, an MIT economist, has linked stunted growth in children and lack of roads today in some Andean highlands to a forced labor system run by the Spanish in Peru between 1573 and 1812.

Trivelli emphasized that poverty reduction, especially in remote areas, takes a long time.

"Social inclusion is long-term, we won't attain it in one year," she said.

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(Reporting By Terry Wade and Marco Aquino; editing by Matthew Lewis)

(For other news from Reuters Latin America Investment Summit, click here)

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