Historically, the Peruvian state bureaucracy has always struggled with even the most basic functions, from internal security, to ensuring effective infrastructure (according to the World Bank, only 11 percent of roads are paved) to providing education in the ethnically and geographically challenging country.But that’s only the national government.
In Peru, thanks to decentralization and tax laws, 75 percent of revenue generated from natural resource extraction is automatically transferred to provincial and district level governments. In the case of mining areas, this means rural (largely poor) counties and municipalities.Many of the elected officials in charge of these local governments – and the huge pots of money they now control – have little education or preparation for public administration. To make matters worse, there’s no local civil service, meaning that an entire body of public servants managing millions of dollars can be changed – and often are – when a new mayor is elected.
So, just to give an idea, the district of San Marcos – the home base of the now-famous Antamina copper and zinc mine (one of the 10 largest mines in the world) – reportedly received $60 million in tax-generated revenue from mining activities in 2011.What has it done with the windfall? In the windswept, poor, Indigenous area stretching from the Andean highlands to the Pacific Ocean, the question is better what hasn’t it done? For one, the district’s capital city, San Marcos, still lacks potable water. In fact, the city is a small-scale sprawl of poverty, hastily thrown up cement buildings and angry youth, many ready to rail against mining to any outsider. The smaller rural villages are even worse off – without potable water, in some cases even basic infrastructure – because many of the resources passed to the district government remain in the seat of local government, San Marcos (a microcosm of the problem of centralization that played out at a national level for centuries).