(above) Peru's newly sworn in President Ollanta Humala , right, waves next to President of Congress Daniel Abugattas during his ceremonial swearing in at the National Congress in Lima, Peru, Thursday, July 28, 2011. Sworn in on Peru's Independence Day, the 49-year-old former army lieutenant colonel won office in a runoff last month. (AP Photo/Martin Mejia)


New Peru president: the poor are my priority

By FRANK BAJAK, Associated Press

LIMA, Peru (AP) -- Ollanta Humala, the leftist military man who won Peru's presidency after abandoning a radical platform, promised in his inaugural address Thursday to make his priority the one in three Peruvians still mired in poverty.

The 49-year-old former army lieutenant colonel charted a plan for spreading the wealth from Peru's mineral boom beyond Lima, where it has been concentrated among a small elite, to long-neglected hinterlands.

"Peru's peasants and the poor in the countryside in general will be the priority," Humala said in remarks before a newly installed Congress and dignitaries who included 11 presidents, almost all from South America.

He quoted South Africa's anti-apartheid hero and former president, Nelson Mandela, in arguing there can be no democracy where misery and "social asymmetry" persist.

Humala's will be a daunting juggling act: He also signaled his intention to maintain the business status quo and honor all international pacts, including a raft of free-trade agreements enacted by his predecessors.

To reassure foreign investors, Humala retained the incumbent central bank chief, Julio Velarde, and named as finance minister Luis Miguel Castilla, a deputy finance minister for the past year and a half in the outgoing government of President Alan Garcia.

The Cabinet is dominated by moderate technocrats but also includes, as culture minister, the renowned singer Susana Baca. She is Peru's first black Cabinet member.

Humala didn't explain how he planned to pay for the generous social programs he catalogued Thursday, most of which he promised during the campaign, though he has said he intends to seek taxes on windfall mining profits.

The pledges include modest old-age pensions for Peruvians at age 65, beginning with the neediest; raising the minimum monthly wage in two stages from $218 to $270 by next year; free preschools in Peru's poorest districts, college scholarships for top-performing needy students and building hospitals in 50 cities where they're lacking. The first minimum wage increase - $27 - is slated for next month.

Humala also promised to invest in public transportation in the traffic-choked capital of Lima; to expand highways and railways; to rebuild Peru's merchant marine and to re-establish a national airline. Aeroperu went bankrupt in 1999.

He said he would dedicate more natural gas from the Camisea field for domestic use rather than export, and has promised to lower natural gas prices, though he did not mention a target price.
Humala won't have an easy time in Congress, where his party has just 47 of 130 seats and will have to depend on lawmakers from the Peru Posible party of former President Alejandro Toledo for a majority.

The main opposition in Congress comes from the Fujimori camp, the second-biggest voting bloc. Humala narrowly defeated Keiko Fujimori, daughter of imprisoned former President Alberto Fujimori, in a June 5 runoff.

The Fujimoristas tried to shout down Humala when, during his swearing-in, he said he was assuming power in the spirit of the 1979 constitution.

That was a snub to the 1993 magna carta passed under the autocratic regime of Alberto Fujimori, who is serving a 25-year prison term for authorizing death squads and corruption. The 1993 constitution specifies a reduced state role in the economy, justifying Fujimori's wave of privatizations of state-owned companies.

Humala got warm greetings from fellow leftist Presidents Evo Morales of Bolivia, Rafael Correa of Ecuador and Cristina Fernandez of Argentina. The United States sent Dan Restrepo, the top Western Hemisphere official in the White House.

The nascent UNASUR union of South American nations met later Thursday and agreed to proposal by President Juan Manuel Santos of Colombia to convene its finance ministers in Argentina, likely on Aug. 10-11, to discuss a possible collective response to the European and U.S. debt crises. The value of some regional currencies against the U.S. dollar and the euro have risen to levels that are hurting exports. Santos said Mexico was invited to participate.

Venezuelan President Hugo Chavez, who closely supported Humala in his failed presidential bid in 2006, did not make the trip to Lima. He is recuperating from chemotherapy after having a cancerous tumor removed last month. Chavez sent his congratulations in a Tweet from Caracas.

Several hundred supporters cheered Humala as he arrived at the presidential palace, shouting "Viva Humala" and "Yes, he could." But some in the crowd expressed disillusion.

Juan Ruedas, the 49-year-old owner of a small clothing store, expressed concern Humala won't work for most Peruvians because he has now surrounded himself with traditional politicians who Ruedas considers corrupt.

"The right has already corralled Humala," Ruedas lamented.

Alan Garcia, who narrowly defeated Humala in the 2006 race, broke with tradition and opted not to attend the inauguration. He quit the presidential palace more than an hour before his successor's swearing-in, getting into a black SUV with tinted windows and departing without any applause from onlookers.

The 62-year-old, pro-business Garcia said earlier that his absence wasn't out of disrespect for Humala but to prevent a recurrence of the unpleasantness of 1990. Congress erupted in catcalls when Garcia transferred power to Alberto Fujimori. His first term had been a disaster. Peru was in the throes of hyperinflation and bleeding from a fanatical leftist insurgency.

Garcia left Peru in considerably better shape this time, with economic growth averaging 7 percent during his five years in office, low inflation and $47 billion in international reserves. Peru's poverty rate dropped from 48 percent to 31 percent on Garcia's watch, according to the government.

But those numbers mask the great disparity of wealth between those on Peru's coast and in the interior, and critics complained of rampant corruption.

The World Bank says that in Peru's rural highlands, where support for Humala was strongest, the poverty rate is as high as 66 percent. Humala won more than 70 percent of the vote in several highland states in the June 5 election.

Associated Press writers Carla Salazar, Franklin Briceno and Martin Villena contributed to this report.

Frank Bajak can be reached at http://twitter.com/fbajak