(For other news from the Reuters Latin America Investment
Summit, click here)
(Adds investment grade, paragraph 7)
By Marco Aquino and Terry Wade
LIMA, April 4 An ideological battle has split
Latin America between open democracies embracing free markets
and leftist regimes opposing them, Peru President Alan Garcia
said on Friday.
Garcia, a former leftist whose first term in the 1980s
ended in economic chaos, now fervently supports free trade and
mainstream policies that helped Peru's economy grow 9 percent
last year, one of the fastest paces in the world.
"South America looks like it's in a type of Cold War, like
the big ideological blocs of the 20th century," Garcia said at
the Reuters Latin America Investment Summit.
Chile, Peru, Colombia, Mexico and Panama favor open markets
and are generating more jobs than leftist governments, he said,
in apparent reference to Bolivia, Ecuador, Venezuela and
He did not mention Latin American giants like Brazil, which
tends to support policies favored by investors but lacks a
major free-trade pact, or Argentina, which has blocked some
food exports to keep local prices low.
"The only way to grow is to have markets," he said. "The
worst recipe in this fast-moving, modern world is to shut
yourself off, like Robinson Crusoe on an island."
Peru's leader, who once favored nationalizing the country's
banks, now spends much of his time luring foreign investment,
and on Wednesday Fitch Ratings became the first major credit
rating agency to lift Peru to investment grade, a change that
will attract more capital.
"The best (development) instrument there is today is the
global market, big investment, and modernity," he said. "Old
concepts of each country building itself up with its own
resources or defending its market are totally obsolete."
Peru, which signed a free-trade agreement in December with
the United States and hopes to clinch one this year with China,
is lining up more deals and has slashed import barriers.
"All free-trade deals that we can possibly have we will
sign," Garcia said.
Garcia, who was wearing a tie clasp with the Great Seal of
the United States on it, has emerged as a regional
counterweight to Hugo Chavez, the president of oil-rich
Venezuela, who has been accused of trying to export his
socialist policies to neighboring countries.
"The president of Venezuela has a different point of view,
but it would be interesting to see if he could have those views
if oil only cost $20 a barrel," he said.
Garcia said he did not want to be part of any effort to
isolate Chavez, a fierce critic of the United States.
"Newcomers to politics always want to be examples, the
shining lighthouse of what's new. Maybe I had that temptation
in my first government, but I'm in my second, 20 years later,
so I no longer have this vain desire," he said.
Garcia has stayed mostly quiet while Chavez has tried to
boost his international standing by helping free hostages held
by Colombia's FARC rebels, or by defending Ecuador after
Colombia struck a FARC camp inside Ecuador last month.
But on Friday, Garcia urged the FARC to free Ingrid
Betancourt, a French-Colombian citizen and former presidential
candidate who was kidnapped in 2002 and is now ill.
"The FARC are managing, diabolically, not the life of
Ingrid Betancourt, but maybe, how her death could hurt
(Colombian President) Uribe," he said.
Though Peruvian politics have stabilized since 2000, when a
two-decade-long civil war ended, analysts say Peru faces two
threats -- illegal drugs and far-left political groups.
As the world's second-biggest cocaine producer, Peru
constantly finds itself struggling to fight corruption fueled
by drug money, and low-level violence between the police, coca
planters, and traffickers.
But drug seizures are up and new anti-money-laundering laws
are stopping illicit cash from reaching the real economy,
Meanwhile, Ollanta Humala, a far-left nationalist
politician who spooked foreign investors by nearly beating
Garcia in 2006, is expected to run for office again in 2011.
Garcia cannot run for a second, consecutive term and his
centrist party lacks an obvious heir.
Still, he said there was little chance that a figure like
Humala could be elected as six years of economic growth have
lifted many Peruvians out of poverty.
"People realize that the best path is the path that has
been chosen," he said.
To avoid having someone like Humala gaining power, he said
the government must spread the benefits of growth by taking
roads, water and electricity to the poor provinces outside
Lima, the capital.
"This would block the temptation of the population to look
backward for a messianic savior that can multiply bread and
fish without investing," he said.
(For the summit blog: summitnotebook.reuters.com/)
(Editing by Braden Reddall)