Javier Silva Ruete — Finance, Politics and Charm 1935-2012

By Nicholas Asheshov

(First appeared in the Peruvian Times, Sept. 22, 2012)

Javier Silva Ruete, who died Sept 21 aged 77, was one of the most colorful of the stars that crisscrossed the Lima financial and political stage over the last three decades of the 20th century.

His most brilliant moment came in 1978 when for two years he was Finance Minister for the outgoing military government.  At the time the country’s public finances were in what was, in those days, the usual shambles, but more so.  The military government, under General Velasco, had been in power for a decade and what with the disastrous agrarian reform, gringo-bashing and expropriations, a billion dollars worth of Russian fighter planes and tanks, exchange controls and so on, by 1978 the whole public administration was on its last legs.  General Morales Bermudez, a sensible, distinguished officer —still alive, I believe— had taken over in 1976 and was moving decidedly but cautiously back to democracy.  This was when he called in Javier Silva Ruete.

Javier, then in his early 40s, moved in a middle-of-the-road leftwing ambient, respectable then and now everywhere, and was one of those people whose energy and personal charm meant that he knew everyone.  I remember Claudio Herska, a top Central Bank economist, saying, “Javier is the only person who can pull this together.”  Claudio was right: Javier did.

His first talent, certainly on this occasion, was to bring together a tight team of public-spirited financial and administrative hot-shots.  These ensured, for a start, that before he accepted Morales Bermudez’s request to become Finance minister, he laid down a set of pre-requisites, conditions.  I can’t remember what they were, though he gave me later his version of them, and it had cost Morales Bermudez dozens of cups of coffee during a final overnight negotiating session.   Morales Bermudez himself had been Finance minister for three years around 1970-73 and knew what Silva Ruete was talking about.

Top members of the Silva Ruete team were Manuel Moreyra, who had earlier been the head of the Central Bank’s legal department and who now became executive chairman of the Bank.  General manager of the Bank was Alonso Polar, a quiet, brilliant bridge player.  The head of the Banco de la Nacion, in effect the Treasury in those days, was Alvaro Meneses, another colourful figure who introduced to Peru the Banco Ambrosiano, the Pope’s bank which went spectacularly bust a year or so later when Alvaro’s friend Roberto Calvi was found dead, hanging over the Thames with a rope round his neck and the other end attached to Blackfriars Bridge.

Silva Ruete’s practical, flexible ordering of public finances, carried out by this team while he dealt with the military and civilian politicos, was greatly aided by a rise in copper prices, and of other minerals and metals, during one of the upsurges following the quintupling of oil prices in the years immediately following 1973.  Peru had been, like most countries, in permanent trouble with the IMF but Washington in general was overjoyed to have some non-military, knowledgeable people to talk to and Peru’s fractured relations with the international community, i.e. the banks and aid officials, was quickly patched up by Silva Ruete.

A new constitution was being put together and everyone was agreed that this was to all intents and purposes a civilian government.  Indeed it was, especially compared to the dreadful Chileans, Argentines, Bolivians and only relatively better Brazilians, Uruguayans, Paraguayans, Panamanians and so on.

In this world, Silva Ruete, with an ivory cigarette holder and a friendly, quick touch for everyone, was a real star.  This was only partly because of his ability to look as though he was drinking in every word and was totally agreed with whoever it was.  He and his team, for instance, wedged out exchange controls, still politically sacrosanct, by introducing no-questions-asked Certificates of Deposit in dollars at the  local banks.  Suddenly it was no longer illegal to have dollars.  Some of the sillier import controls were relaxed and, in general, a breath of financial common sense joined, through Javier, with political moves towards elections, which indeed took place successfully in 1980 when Fernando Belaunde lanslided into power.

The loans and commodities boom featured, in 1979, the extraordinary boom in silver and gold prices, a massive scam engineered by a group of international banks and traders led by the Hunt Brothers, from Dallas.  Peru, and Javier Silva Ruete’s financial administration, unwittingly played a key role in this fraud that saw silver —of which, then as now, Peru is a top producer— gazump from $3 the ounce to $50.  Neither Silva Ruete himself nor Manuel Moreyra at the Central Bank realized that there was anything fishy about the sudden rises —but then, nor did anyone else, much less the New York and Chicago regulators.  The Banco de la Nacion was caught, literally, short and had to be bailed out for over $100mn, real money in those days.  (The Belaunde government later, in an operation led by Pedro Pablo Kuczynski [PPK], the Mining minister, successfully went on to sue the perpetrators of the scam under the anti-Mafia RICO legislation of the time).

Silva Ruete, as is often the case with independent, clever minds, was no success as a businessman.  An early venture, for instance, was into the local manufacture of slide rulers just as handheld calculators were coming in and which, for the price of a box of corn flakes, could do the job much better.  He also went into the printing business but that was not a success either.  He always seemed, however, to be able to land a job in the public sector and was Peru’s representative for some years in Washington, or representative of the Andean Finance Corp, well-paid, tax-free jobs of that ilk.  He even had a new fling at the Finance Ministry for a time under President Paniagua and President Toledo a few years ago.

His personal life was, naturally, colorful, starting with a close friendship from student days with Mario Vargas Llosa, and Javier made a cameo appearance as ‘Javier’ in Mario’s super early comedy ‘Aunt Julia and the Scriptwriter’.

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