A Stalled Antonov Bi-plane Evokes the Warm, Get-Rich Romance of the Amazon

By Nicholas Asheshov

Abel Muñiz’s hacienda in the jungles of the lower Cosñipata Valley has been stitched together over the past six or seven centuries.  Today the buildings are a homey mixture of wood, clapboard, stone, cement, palm thatch and corrugated iron.

The hacienda features the same sounds and smells as farmyards the world over —ducks, sheep, cows, horses, pigs, chickens, geese, dogs, cats, rats, bats.  In addition, the pets include a small caiman, a tapir, monkeys and parrots. Greta, Abel’s wife, first thing in the morning, used to go down to the sort-of natural swimming pool that they had made, to clean out any snakes and other fauna that TripAdvisor might make a fuss about.

Feb 15-2013 - Country Notes editA pack of women and children swirls vaguely round the kitchen patio.  The warm air is sliced every second by a thousand full-color and full-throated tropical birds.  The distant rush of water over a set of rapids in the Rio Tono is a grey-noise background to the scritch and hum of a million insects and amphibians.

Muñiz, a portly 60-year-old agronomist who tells a good story, says that the farm, Villa Carmen, belonged to Isabel Chimpuoccllo, a daughter of Inca Huayna Capac and the mother of Garcilaso de la Vega, the most famous of the post-Conquest chroniclers.

Farms in the jungle in those days, as they frequently still do, produced coca.  Today Muñiz keeps cows, has some ponds of carp, and takes tourists up the Rio Piñipiñi, the lowest reaches of which flow through his property after running down a section of the Pantiacolla hills in the Manu National Park.

Lost city mavens will instantly have perked up at the name Pantiacolla. This is a favorite haunt of planners of expeditions to discover Paititi. Italians, Scots, Americans, and French have been there in the past five years, and there once was also talk of a big Russian-US-Spanish effort being planned.

Not much was heard of Cosñipata till the 1960s when Alliance-for-Progress President Belaunde drew a line on the map between Cusco and Rio Branco, capital of the Acre Territory, the nearest town in Brazil, and called it an Intercontinental Highway.

An army road battalion was sent off to Paucartambo, then as now a charming colonial sierra town with a stone bridge. By the early 1970s, when I first knew it, Cosñipata was beginning to bustle with a frontier mixture of loggers, hunters, rice farmers, jeeps, missionaries, their Indians, gold panners and, in this case, the beginnings of the Manu Park.

There is no region on the planet that breeds more illusions than the Amazon. I wish I had a lottery ticket for every exciting, challenging conversation in which I’ve participated about the potential of this jungle plant, that jungle animal and the other jungle valley.

Muñiz is one of these enthusiasts.  One afternoon the other week he took a pick-axe out to the forest near his house and came back with a big, yellow papaya-shaped vegetable that weighed in at 10 kilos.  For supper it tasted like French-fried potatoes.

“It’s a creeper that grows up the trees,” he says.  “You can grow a tremendous cash crop without cutting down a single tree.”

Besides a hundred plants like Muñiz’s wonder-spud, the Amazon has, of course, a pharmacopia that is becoming, they say, better understood and appreciated nowadays.  The best-known to appear in the past two or three decades in Peru is the uña de gato, cat’s claw, which is marketed extensively in Lima and everywhere else as a cure-all.

But the most remarkable thing about the cornucopia character of the upper Amazon is the impressive contrast between the promise, the talk and the dreams, and the mud, the mosquitoes, the heat, and little else besides charm.

Pilcopata, the jungle town a mile away from Villa Carmen, is a lot bigger than when I first saw it three decades ago.  But it’s still a weedy, clapboard dump.

The people are generally quiet, amiably unambitious and unaggressively disorganized.  They know the jungle can’t be beaten, so they join it.

But people like Abel Muñiz don’t.  They lose Round One, Round Two and so on but they’re not going to give up and, damnit! they don’t.

In a field a couple of hundred yards from the hacienda buildings is a remarkable, evocative sight.  Here, in a clearing in the jungle, stands a large bi-plane, yes, a giant Gipsy Moth, quite new-looking.  A tatter here, a bird’s nest there, but the tires are full of air.

Against a backdrop of warm, misty, menacing jungle hills and a powerful river nearby, this is an impossibly romantic sight.  Like most piston aircraft of the old school, the nose is way in the air, with a four-blade propeller.  Inside, the fuselage slopes steeply backwards.  One climbs up towards the cockpit, keeping an eye and an ear open for snakes.

There are some Cyrillic signs in the cockpit and it takes no imagination to picture the pilot and co-pilot in those tight leather helmets and threatening oval goggles familiar from movies involving the Russian air force.

The plane is, Abel Muñiz tells me over a warm beer on his kerosene-lamp-lit veranda, an Antonov Two. They’re apparently still in production in Poland at US$300,000 apiece, and in service there and in Cuba today.

Its single nine-cylinder engine produces 1,000hp. It takes 15 passengers at a top speed of 170 mph, and a stall speed of 55 mph.  Unloaded, it can land in 60 yards, and take off with up to 500 kilos in just 80 yards. With a full 1500 kilos load, it can take off in 450 ms.

Abel tells me —news you can use— that there is another half-dozen of these wonders scattered round the Madre de Dios and the northern jungle.  They are the remnants of a venture only a decade ago when he did a deal with a Russian co-operative.

“Started off pretty well. But what with devaluations and recessions, terrorists and drug people, and no tourists, it flopped.

“My friends and relations thought I’d become a drug baron and insisted that I lend them hundreds of thousands.  Of course, the police and the tax people were the same.

“It’s hard to make anything work in Peru, let alone in the jungle.”


It turns out that Abel’s Antonov II, the AN-2, also known as the ‘Annie’, was one of the great aircraft successes of the 20th Century.  I learn this from a fascinating, first-rate article on Wikipedia which tells us that it is “the biggest single-engine bi-plane ever built” and that more of them, 18,000-plus, were built than any other aircraft, and has only just lost this record to the Lockheed C-130 Hercules.

The An-2 started production in 1947 in NovoSibirsk, and was still being produced in Poland in the 1990s.  It was simple to operate, powerful and could fly at incredibly slow speeds, like 30 to 40 mph, thanks to extendable slots on the leading edges of the wings, which functioned with rubber bands!   Pilots learned to fly it so that it could land almost like a parachute and, in a suitable wind, backwards (over the ground). North Korea has a lot of AN-2s, it seems, and China produced thousands with its own modifications. With the breakup of the USSR, during the 1990s the AN-2 was sold, as it was to Abel Muñoz, all over the world for forestry, agriculture, ambulance, mapping, and there are a few in the U.S. which appear in air shows and for parachutists.  For more, search for Antonov 2 biplane on Google.

This article appeared in the Peruvian Times Feb. 15, 2013.

Downtown in The Lost Cities of the Amazon

This article first appeared in March of 2012, in Spanish in Caretas and in English in the Andean Air Mail & PERUVIAN TIMES.
By Nicholas Asheshov
Some weeks ago two events, one of them startling, came together to pin-point the mysterious new conundrum of the Amazon.

The first was the appearance on a busy riverbank in the Madre de Dios of a few dozen members of a previously-isolated group of Indians. They killed someone who had been trying to help them.

The naked Indians, seen on TV screens around the world, were described by anthropologists as descendants of an unbroken line of hunting and gathering savages, living fossils of our neolithic past.

This is, according to new Amazon thinking, incorrect. These Indians are the sad, socially degenerated remnants of nations and tribes that were productive, sophisticated and stable just a few centuries ago.

The other event was an article in The New York Times that reported on the discovery in Acre, only a few hours travel from the Madre de Dios Indians, of extensive, deep straight, or sometimes circular, trenches, ridges and mounds dating back to pre-Columbian times, indicating a large, well-developed society.

This was just the latest evidence that the Amazon, or at least parts of it, was heavily populated by well-organized societies in much the same way as the high Andes were remodelled by the Tiahuanuco, the Chavin, the Chachapoyas, the Huari, and the Incas.

Over the past couple of decades the pre-history of the Americas has been revolutionized, setting off poison-tipped academic and ecological vendettas.

First of all, the Americas were populated much earlier, at least 33-35,000 years ago, double the time previously calculated. That is back to Neanderthal epochs.

Second, there were many more people here when Columbus arrived than was earlier thought. And, most important, the societies and nations of the Americas were much more sophisticated and structured than was previously understood. They were agriculturalists, not the war-whoopers of the movies. Their mode of life and agriculture had massive, long-term effects on the original pre-human forests. Fire was a basic control mechanism.

Today the evidence of genetics, linguistics and archaeology is clear that the Amazon was not just an impenetrable green hell populated by primitive hunters and fishermen eking out an unchanging, culturally marginal existence.

The same applies to North America. Here most of the descriptions of primitive Indians come from 18th and 19th century travelers who were seeing only the sorry leftovers of great nations that had been obliterated by smallpox, viral hepatitis, influenza and other European and African diseases. The Conquest set off the Dark Ages in the Americas.

In the Amazon the same collapse, featuring malaria and yellow fever, was exacerbated by the rubber boom of the late-1800s and early-1900s.

You can check this out in three fine recent books. Two of these are Charles C Mann’s easy-to-read, well-researched 1491 and a sequel, 1493, just out; and in John Hemming’s Tree of Rivers, a masterly description of the Amazon. Hemming, author of the classic The Conquest of the Incas has also written, earlier, three volumes on the peoples of the Amazon.

Charles Mann describes, for instance, how my old friend William Denevan, Professor Emeritus of Geography at the University of Wisconsin, discovered how the Beni, on the edge of the western Amazon in Bolivia, was a flourishing, well-organized center of islands and causeways on what is today a bleak, sparsely-inhabited combination of dense jungle and flood-plain, inhabited today by sad remnants of Siriono Indians.

Bill worked on the Peruvian Times just before me in the 1960s and his stories on the Beni and similar mounds and trenches around Lake Titicaca in the PT were the first indication of this revolution in South American prehistory.

“Beginning as much as three thousand years ago, this long-ago society,” Mann writes, “created one of the largest, strangest, and most ecologically rich artificial environments on the planet.”

Great stuff.

Mann describes the Amazon as one of the world’s half-dozen agricultural heartlands, where plants were domesticated, the epicenters of civilization. Others were the tropical Andes, Central America, the Fertile Crescent, and China.

The Amazon, including the area where the savage Indians appeared the other day, just north and west of the Beni, was the source of yuca, known elsewhere as manioc or cassava, as well as tobacco, peanuts chili pepper, chocolate, Brazilian broad beans, the peach palm, and Brazil nuts.

It was also the homeland of Hevea Brasiliensis, the rubber tree, which was to be, along with steel and oil, one of the three creators of the 20th century version of civilization.

For the Amazon, including the Indians on the banks the other day of the Madre de Dios, rubber became a disaster, just as gold and silver had been for Peru and Mexico. The malaria and yellow fever, imports from Africa, that it helped to spread turned the Amazon and its western tributaries into what Charles Mann calls “depopulated fever valleys.” Slavery did the rest.

The Amazon as a center of civilization has become the subject of a bitter dispute between two magnificent lady academics, the archaeologists Betty Meggers of the Smithsonian Institution and Anna Roosevelt of the University of Illinois.

Hemming mentions the two warring camps on the issue of whether or not there were tribes with sophisticated, stable, large populations: Dr Meggers says that the Amazon basically had only hunters+gatherers; Dr. Roosevelt says that there were big lively societies all over the place.

Here is a message to me the other day from John Hemming and you will find nowhere else a more precise and appropriately colorful description of the state of play today in Amazon studies.

Broadly, I think that Anna (and her acolytes like Michael Heckenberger) are right to say that there were large chiefdoms on some riverbanks of the main Amazon and its tributaries (although there were also very long stretches of uninhabited river). Those chiefdoms were based on the river and its fish and turtle resources. 

But I think that the Roosevelt school exaggerates the size and sophistication of their beloved chiefdoms, which they compare to the great civilizations of Peru.

They also exaggerate the extent of human manipulation of forests. Remember that it was very laborious indeed for early man to fell trees (other than palms) with their stone axes. And they had no need or desire to do so: they were very happy in pristine forests full of game. Planting the trees they liked near their villages was merely rearranging the deckchairs. It did not alter the Amazon landscape.

Meggers is right about the inability of Amazon terra-firma forest to support villages of more than a thousand people maximum – the surrounding game is exhausted otherwise, and the soils under mature forests are too weak to sustain large-scale farming. So, away from the rivers, early tribes were not much larger than their modern descendants at the time of first contact and before being hit by imported disease.

For many years, John was Secretary of the Royal Geographical Society, London, and we can all understand what he means by “rearranging the deckchairs.”

But not everyone agrees. Charles Mann in his just-published 1493, calls the Amazon “the world’s richest garden,” quoting archeobiologists and looking at parts of the Amazon today that are carefully-distributed and well-tended collections of trees, plants and fish and game reserves.

Today there are tourists but it can still be a tough place. Near the Acre ruins noted in The New York Times, settlers are still gunned down by big-money ranchers. I remember John telling me of the day in 1961 when he carried the arrow-filled body of his friend Richard Mason back to camp. A decade later, in 1970, I myself was searching the jungles of the Pantiacolla in the Upper Madre de Dios for my friend Robert Nichols, chief reporter of the Peruvian Times of which I was then the editor, who had set out to find Paititi, a version of El Dorado. It transpired that he, and two French companions, had been stoned to death by the Machiguengas.

Unlike John, I am not prejudiced by knowing what I am talking about and I unreservedly plump for the Roosevelt school’s bumptious Amazonian super-civilizations and I am supported by no less than Brad Pitt and Angelina Jolie. Their latest movie, due out this year, is The Lost City of Z, where Brad plays Colonel Percy Fawcett, the English explorer, searching in 1925 for El Dorado in the Amazon. Let’s hope that Brad has better luck than Percy, who never returned.


Colonel Percy Fawcett said: “The answer to the enigma of Ancient South America – and perhaps that of the entire prehistoric world – will be found when the old South American cities are located and opened up to scientific research. These cities exist, and I will prove that they exist.”
Tony Morrison, the wildlife photographer and author, on a recent trip to the Beni:
“Setting out from Trinidad in the Beni we hopped on a 35b bus in the plaza and headed to the great mound at Eviata where the entire village is built above the floodplain. I went there to see the last of the Siriono tribe, as they have a base around the old mission church. What a bedraggled lot they were and the mound is now topped by a huge ENTEL satellite dish — not a bad place to site it as it should be above the annual flood.”
Vera Tulyneva charlie.quispe@yahoo.com . Ms Tulyneva is completing a thesis on “Paititi” at the Universidad Catolica, Lima. Commenting on The New York Times story on ancient remains in the Acre:

“The earth constructions of Acre have been in the news for the past five years. The first one to speak of them was Martti Pärssinen, an historian from Finland who had been working in the region for many years. In fact, they are not “geoglyphs,” i.e. earth figurative drawings of apparent religious/ritual function, but rather utilitarian earthworks, like drainage trenches. Acre, Mojos, Beni, Xingu and many other Amazonic regions are full of them.”
Michael Heckenberger website on Xingu: The Xingu Ethnoarchaeological Project
An article on Acre: Pre-columbian geometric earthworks
and Geometric Earthworks in the Upper Purus

The New York Times: The Nazca Lines of the Acre jungle – Land Carvings Attest to Lost World

Nick Asheshov is a veteran journalist, noted explorer and entrepreneur. He was editor of the Peruvian times from 1969 to 1990.


In response to this article, Dr. Jennifer Watling responded: (See her paper on the subject: Watling et al 2017 + SI)

For you to state the following: ‘These Indians are the sad, socially degenerated remnants of nations and tribes that were productive, sophisticated and stable just a few centuries ago’ for me shows a great disrespect and lack of knowledge about indigenous Amazonians and their ancestors, I’m afraid.



Dr. Jennifer Watling
Post-doctorate Fellow,
Laboratório de Arqueologia dos Trópicos, Museu de Arqueologia e Etnologia,
Laboratório de Micropaleontologia, Instituto de Geosciências,
Universidade de São Paulo

Chinchero — Lost in the Clouds of Poor Engineering, Bad Finance

By Nicholas Asheshov ✐

It seems President Kuczynski is to lay the First Stone of the new Chinchero Airport in Cusco this coming week. If so, it will be the third first stone for this sad project. Presidents Toledo and Garcia have preceded him. Some locals say Presidents Belaunde and Fujimori were others. We have to hope President PPK’s stone suffers the same fate. Chinchero is a disaster waiting to happen.

This week top regulatory officials in Lima resigned in protest at the illegal contracts for the financing for Chinchero. But crooked finance contracts are the least of of what has always been a rotten project.

The Cusco city fathers say they need a new airport. This is incorrect. Their object is to grab the valuable building land of the present airport. But even if Cusco needs  a new airport, Chinchero is easily the worst of the alternatives. The Pampa de Anta, nearby, is incomparably better. Anta is dramatically lower in height and is already runway flat.

Chinchero is outside Cusco  at an oxygen-less 500ms higher, on the road to Machu Picchu.

It started off, as these projects do, with funny money. Four years ago the Cusco Regional Government, run then by ‘Humala associate Jorge Coco’ Acurio, paid $70 million for a 330-hectare string of potato fields on the rolling, cold, cloudy massif of Chinchero.

The lucky owners of the fields were the 426 members of a couple of Chinchero’s comunidades. They received $230,000 for each hectare, making them by far the most expensive potato fields in the world. You can buy a hectare of potato field in Idaho, the world’s biggest potato region, for $5,000 per hectare. In expensive southern England, in Devon and Somerset for instance, the same potato field might cost GBP 10,000, one-twentieth of the Acurio Chinchero price.

The Chinchero potato fields are good for potatoes, beans, a couple of sheep and a burro.  They make a lousy airport. Difficult in fact to find a worse location. The average height of this ancient farmland is 3,700 m.a.s.l. The only commercial airport in the world that is higher is El Alto, at 4,000 m.a.s.l., the airport for La Paz. El Alto can be used only for local one-hour , max 90-minute hops down to Cochabamba and Tarija and Santa Cruz. Arica is a ski-jump away, Lima a hop up the coast. But that’s it. El Alto never will be commercial because planes cannot take off at these altitudes with a full load of fuel and passengers.  You can have either a full tank and just a few tourists or lots of tourists and a few gallons of fuel, enough to get down the hill. In the case of Chinchero, that means Lima. As Newton said, apples fall down for free. Bolivia’s international airport is at Santa Cruz at 400 m.a.s.l. Passengers to and from La Paz to Rio, Buenos Aires, Miami and even Lima go via Santa Cruz. Check the timetables.

It will be the same for Chinchero. The bureaucrats and politicians in Cusco and in Lima, at ProInversion and the Ministry of Transport, have taken to calling it the ‘International’ Cusco airport. This is a lie propagated by the under-funded concessionaire, Kunturwasi.  Flights between Chinchero, if this idiot, foggy project goes ahead, will continue to go via Lima, as they do today and till the next century. With one difference. The tickets will cost $300 more than they do today.

Fog, hailstorms, normal in high mountains, add to the Chinchero danger. The glaciers and snowfields of the Cordillera Urubamba, at 6,000 m.a.s.l., loom over Chinchero. They are just a few miles to the north of the Chinchero potato fields. Picturesque, dramatic. Dangerous.

Technological advances in aviation are focused on electronics and nano materials. But Newtonian physics will not change, whatever the Cusqueño powerbrokers seem to think.

It could not get worse? Yes, it does.

The Chinchero massif is a limestone base. For engineers, this means sinkholes. For instance, the Inca terraces at Moray close to Chinchero at the same height, are sinkholes.  The Chinchero lakes of Piuray and Huaypo reflect the same geology. Engineering studies reflect no deep drilling to assess this risk. A 200-ton airliner will one day  land at Chinchero and open a massive instant hole. Not good.

Cusco road, sewage and electricity services are already pathetic. There’s talk, but no plans exist for new transport between Chinchero and Cuzco, nor Urubamba. Power cuts are almost daily in Urubamba, the province in which poor Chinchero is located, thanks to state-owned Electro Sur Este.

What to do with the 7 million tourists a year promised by President Kuczynski?  Machu Picchu is already at a standing-room-only 5,000, sometimes 7,000 visitors a day. A study commissioned by the government says the max daily entry cannot pass 5,400/day. Call it 2 million per year.

Cuzco thinks, says, it needs a new airport. The present one, Velasco Astete is at 3,250 m.a.s.l., 500ms lower than Chinchero, which is a big difference at these delicate heights.  Velasco Astete, run and owned by Corpac, the government airport authority, consists of 240 hectares of good flat land which could easily and cheaply have its runways extended and expanded, with new terminals and, above all, new electronics. The A219 and A320 used by Latam and Avianca can fly in on self-drive computers as they do routinely, of course, in Europe and North America where the weather, though for sure not the height, is much worse than Cusco ever is.

But the Cusco shakers, the chambers of commerce and the local politicos have other plans for Velasco Astete’s 240 hectares of land, which is only a few minutes from downtown. As building land it is worth already today $1,000/m2, $2,000/m2 before the end of the decade. Use your own fingers to work out how much this free gift of land will be worth to the imperial city’s top dogs.

In theory, the central government (all Peruvians) is owner of the land,  and indeed this is how it should be. But, no, the Cusqueños have already bought it. Under a quiet agreement with former President Humala, the $70mn it paid the Chinchero comuneros is being handed over to the central government in exchange for the 240 Corpac hectares of Velasco Astete.  Acurio was later thrown out of the regional president job by the Cusco Supreme Court for one of several instances of corruption. Acurio is one of the Humala-Heredia team being investigated by state prosecutors for corruption linked to the jailed Mr. Belaunde Lossio for thousands of millions of dollars in state construction contracts.

So Chinchero is shrouded in big money corruption, and should be stopped, investigated on these grounds alone. This apart from its technical stupidity, a characteristic of corrupt projects.

There is a good way for the Cuqueños to have their cake and eat it too. They can do the sensible thing and build a new airport on the Pampa de Anta, closer than Chinchero to their downtown and flat as a tortilla. It needs a few million bucks worth of drainage but none of the expensive earthmoving of Chinchero. Its approaches are no more dangerous than Cusco itself, better actually.

What height is Anta? Same as Velasco Astete, 3,225.

What is the Region Cusco to do with its world-record expensive potato fields, burro grazing at Chinchero? Forget it. The money has long gone on pick-up trucks and on a forest of dreadful cinderblock highrises.

Chinchero is a traditional Andean village with a fine cultural tradition in textiles, with superb views of the cordilleras reaching over to Machu Picchu. Leave it as it is. No airport means tourists will retain as fine a view as any in the Andes. The bells of the charming colonial church will continue to float out over the Inca ruins, the primary schools and the workshops of the internationally recognized weavers.

Nick Asheshov was editor of the Andean Air Mail & Peruvian Times during the 1970s and 1980s, and of The South Pacific Mail, Santiago during the 1990s.  He was Latin America Editor of Institutional Investor, New York over the same period.  He lives in Urubamba, where he writes a blog and where he has been prominent in the hotel and railway business.

This article appeared in the Peruvian Times on  January 26, 2017

Camels, Commodities, and Bankers Instead of the Incas

Peru is going through its most serious drought in decades.

The piece below on Camels etcetera was published half a dozen years ago in Caretas. The author adds this today (December 15, 2016):

I discussed the longer-term global warming issue the other day with President Kuczynski, asking what he has in mind, and referring specifically to the continued drop in fisheries stocks in the Peruvian Pacific, the disappearance of the glaciers in the Central and Southern Andes, and continued logging in the jungle. He replied it was essential to rebuild fisheries stocks, meaning cutting back in commercial and factory fishing. On logging, he said the first thing has to be a halt in gold placer illegal mining in the jungle. In the mountains, he said the government is planning high altitude forestry plantations a la Inca.

Let’s hope.

Camels, Commodities, and Bankers Instead of the Incas

By Nicholas Asheshov

Ferocious blizzards in the United States, a warm North Pole, biblical floods in Queensland and drought in northern China are being blamed on La Niña but here in Urubamba close, one supposes, to the Niño+Niña epicentre, the climate could not be more charming.

The shock pre-Niña rains here a year ago, which cut away big slices of the railway to Machu Picchu, have been followed this year by the traditional monsoon mixture of daily sunshine and rainfall. It’s sparkling, green and friendly, our favourite time of the year. Here we are in the mysterious, carefully-sculpted Cloud Kingdom of the Incas. They got it right.

The first El Niño that gave Peru a headline role in the world’s climate drama occurred four decades ago with the 1972 Niño. Newspapers worldwide published little maps showing Peru with arrows going in all directions. My sister Anna, an international skier, complained that Peru’s desert rainstorms were ruining the snow in the Swiss Alps for her championship schedule -globalization avant le mot.

That Niño had been preceded in Peru by a famously remorseless anchoveta hunt by the brash new Peru fishing fleet led by the engaging, brilliant Lucho Banchero. Every single anchoveta, from the beach breaks to the whale belt 100 miles offshore was netted. Boats would capsize and sink with too much fish. The catch was 12 million tons, one in every five fish caught worldwide that year.

The Apus struck back instantly and, as we will see, they are still furious. The horizon-to-horizon clouds of seabirds, the world’s greatest, have never returned. We watched starving pelicans fight for their last scraps in the Surquillo market. The price of fishmeal, corn, wheat, sugar, cotton and soya skyrocketed on the New York and Chicago markets.

Serendipitously possibly, OPEC doubled and tripled the price of oil to $15 the barrel.

I myself moved the market. I reported to McGraw-Hill’s commodities wire on the basis of a good-humoured tip from the U.S. Embassy, then literally a stone’s throw away on Av Washington, that Arabs had come to Lima to buy copper. I practically had them mounting their camels in flowing robes at the door of the Hotel Bolivar before riding down La Colmena. The Chicago Board of Trade copper price jumped from 60 to 70 cents the pound but I was too young and poor to take advantage. In any case I had just come from Fleet St where you learn on Day One never to believe your own story.

Thus the first post-WWII price crisis. Nixon had de-pegged the dollar from gold. The oil people had no idea what to do with their billions –before that a million or two was real money– and gave it to Citibank who lent it to obscure states that even Brazilians hadn’t heard of, to Peronists in Argentina and to the Banco Popular in Peru. Six hyper-crises later, here we are yet again. Hundred-degree heat scorched the wheat crop last year in Russia and the Ukraine, The same economists who six months ago were gasping deflation are now fighting inflation by, of all things, reducing taxes.

So here in Urubamba we all know that bumbling bankers, confused bureaucrats and a cascade of Niños and Niñas have packaged themselves into a global rollercoaster. Stop the World, I want to get off, though I bet that here in Peru we’re safer than anywhere else.

Here in any case is where we stand, broad-brush, in the southern Sierra as far as global warming is concerned.

Four decades of figures from Senamhi, the weather bureau, show an average increase of between two and three degrees centigrade –the figures themselves are precise but it depends on the location. This is a lot. The glaciers from the Vilcabamba south to the Cordillera Real above La Paz and Lake Titicaca have all but disappeared. The remains of old airplanes that crashed into them 30 years ago are being uncovered.

Average rainfall has lessened, too, though the overall figures aren’t startling. But the rain now comes in sharp bursts, meaning there’s a lot less for farmers.

“We’re having to undo the work of decades where European NGOs brought in expensive cows and crops like alfalfa to feed them. Now there’s not enough water,” a government official in Cuzco tells me.

“We’re bringing back llamas and alpacas, smaller fields. We’re going back to how it used to be.”

As you might imagine, the Incas had it all clear. Their big polylepis-queuña forests conserved water and their thousands of terrace complexes made best use of it.

If I, like many of my friends, were running for President, my plan de gobierno would be just four words and here they are:

Back to the Incas.

This February, 2011 article was first published in Spanish in Caretas.

The people who ran the Sun

By Nicholas Asheshov

The Incas, living as they did at 3,000m a.s.l., focused on the Sun’s capacity to provide more than warmth for their fertile, glacier-fed tropical valleys. They and their predecessors grasped, like the Egyptians and others, that the movements of the Sun, moon, and stars could predict rain and temperatures.

Informatica, then as now, was power. But the study and understanding of the sun and the stars gave the Andean peoples much more than a weather channel. They were able to reflect the orderliness and mathematical precision of the heavens into their own world. The unequalled exactitude of Inca stonework and their careful, magnificently engineered, imaginative landscaping of their mountain world was a statement of philosophical power on a Shakespearean scale. They would control the uncontrollable: the earthquakes, enemies, famine, and disease. Under the Inca there would be no apocalypse.

The Incas took it a logical step further. They would control the Sun itself. At Machu Picchu, Choquequirao, Pisac, and a score of other centres, they placed carefully-engineered granite blocks and windows so finely that at the solstices —June 21 and December 21— needles of light would hit exactly at such-and-such a marker.

The Incas, like politicians through the ages, spun the Sun story. It was they who were family with the Sun, sons no less of the Sun. Running the universe had become a family business. The sun’s rays would change direction on the orders of the Inca every 187.5 days.

At the winter solstice, the Inti Raymi, visitors to Ollantaytambo today can climb high up to the other, western, escarpment of the Rio Vilcanota and at 7:00 a.m. on and around June 21 can look down across the river half a kilometer away and watch a sudden sharp spotlight, then, moments later a couple of hundred yards away, another and then another, appear on an Inca throne-room the size of a tennis court.

If this is a stirring experience today it is not difficult to imagine the awe,, the grateful weeping, the roars of enthusiasm with which tens of thousands of Inca faithful would watch this mystic magic five, six and more centuries ago. They would see their Inca and his family re-born, the unchallengeable nexus of this world with the past and the future.

Accurate knowledge of how to interpret and predict stellar movement was a vital part of the management of a heavily populated agricultural society for which control of irrigation water and of the rivers was essential in both drenching monsoons and periodic drought.

The Incas upgraded the Tiahuanaco and Huari terrace systems and roads into one of the world’s safest and most productive polities, as we can see today from a million terraces in great flights of ingenious engineering of one of the planets most spectacular sculpted landscapes. The renovations included unequalled mountain hydrologic and civil construction, together with agricultural and genetic research.

The magnificent interconnected terraces in the Colca, the Urubamba, the Pisac and a score of other Andean valleys needed sophisticated agricultural techniques and engineering controlling water, heat, and experienced biological genetic experimentation. These terrace systems were so delicate that most of them are today unused because no one is sufficiently knowledgeable and well-organised to use them.

The Inca Empire, stretching thousands of miles along the Andes from Colombia to Argentina, was joined by perhaps 15,000 miles of stone all-weather roads with A, B and C grades of size for lateral valleys of better quality and deeper penetration than any land communications system anywhere in the world until the advent of the railways in the 19th century. Legal, census and production records were kept on the decimal-based khipu knotted strings.

Warehouse complexes stored food and clothing. The Andes were more cohesive, more productive than anywhere in contemporary Europe, on a par with Ming Dynasty China.

Today energy not the Sun, has become the new god. It is energy, starting just two and a half centuries ago with the invention, in England, of the steam engine, which has created a different universe. Before 1750 no one moved faster than a horse, a running man, or a sail-driven galleon. Wood fires became coal, electricity, petroleum and nuclear.

A Bank of England economist calculated the other day that if we look at the 50,000 years of the existence of modern homo sapiens and call it 24 hours, 99% of the progress will have taken place in the last 20 seconds. It’s a nice notion though it might be seen to give short shrift to the Acropolis, to Leonardo and Bach. But it makes the point that few among the seven billion of us can understand the world today and for sure no one can control it. It is built to change. Intrinsically unstable. It must, faster and faster, keep on the move.

By contrast, anyone can see, at Machu Picchu and at Sacsayhuaman that the people who built these achievements did indeed understand their universe. They had done it themselves, stone by careful stone. It was built never to change, to last forever. Maybe it will. FIN

First published in Spanish in Caretas in March, 2015

Finance Tightens — Peru joins the Troubled Ten

By Nicholas Asheshov

Morgan Stanley has told its clients that its MSCI division, which monitors international markets, is preparing to downgrade Peru from EM, Emerging Market, to Frontier status.

MSCI has also expanded its Fragile Five 2013 list —Brazil, Turkey, India, Indonesia and South Africa— to its Troubled Ten for 2016, to include also Peru, Colombia, Chile, Malaysia and Singapore. MSCI says these countries have new and above-average currency risks. These countries will have increasing difficulty in covering their current account deficits, meaning that debt payments plus imports will be higher than today’s low, slow income from exports.

The party is over.

For Peru it was a good one, by far and away the best in memory. During the first dozen years of this century it catapulted Peru into a respectable new level of economic growth and management. An urban middle class expanded by millions. Poverty in the Andes dropped by millions. Pay levels and property values doubled.

But today in 2015, the rapid growth of China that helped Peru, Brazil and a score of others to flourish is finished. This was signaled last week by an initial 4.4% devaluation of the Yuan, the Beijing currency. It was this that woke up the Wall St. analysts even though the slowdown had started a year ago.

The practical effect is twofold.

One is that China is saying it will need less and pay less for oil, gas, copper, iron ore, lead, zinc, gold and silver. Second, it means that for the coming few years at least, China will be growing not at seven percent, much less the ten percent of earlier years, but more like one or two percent. This is the new normal, like the United States struggling to get higher than two percent a year, Europe which cannot get yet to one percent. China is joining them, just another shambling mammoth.

Peru, though no monster, marches to the same drumbeat. A remarkable part of the past couple of decades, here and elsewhere, is how much has changed for the good despite the weak quality and performance of the government, and the public administration. The ministries and the Central Bank have been slow and often indecisive. There is no sign that they are improving. Out in the provinces it has become seriously dysfunctional.

But this has always been a rough neighborhood. Few other countries in Latin America are any better and some are much, much worse. Brazil’s economy is falling this year as it will in 2016, in the midst of world-class corruption and mountainous mismanagement. Sao Paulo, for instance, has run out of water. Venezuela and Argentina, two of the best-endowed countries in the world, continue to sink into incoherence, apparently endemic. This is a level of political stress from which Peru has notably escaped with no sign of a turn, much less return, to the serious confusion of the 70s, the 80s and the 90s.

The most consistent measure of the perversity of today’s financial markets is in the commodities. These will continue to stay low and to sink. This is not, exactly, because the world is in recession. It is not even that demand for copper, oil, lead, zinc, tin has fallen but that it is not rising to absorb what is coming every day onto the market.

New iron ore mines and oil and gas fields and techniques have opened, paid for with cheap money. The problem is that even cheap money has a price, has to be paid for. The iron ore companies, including Vale do Rio Doce, Anglo American and BHP, have between them issued $200,000mn worth of bonds to finance mines without a market. China was supposed to buy it but is disappearing back into its Oriental mist. A part of this is the heat-hazy nature of Chinese accounting where statistics, profits, loans and taxes are spelled differently in Chinese. The same happened in Japan as of a quarter of a century ago.

Copper is in the same slow boat. In Peru, Toromocho (Chinese), Cerro Verde (Freeport M), and Las Bambas (Chinese), fine mines all, will be getting $2/lb instead of the $4-5/lb they expected just three years ago. Chile, led by Codelco, the state-owned, high-cost mammoth, has it even worse which is why it, too, is being downgraded.

Morgan Stanley says that its downgrade warning on Peru will be confirmed on September. 30 but this is a formality. It means that foreign funds will be selling their investments in companies like the Banco de Credito, Graña y Montero and Buenaventura quoted in Lima, and Peru-based companies quoted in New York and London. Many funds will be selling, too, some of their holdings of bonds issued by companies in Peru. The sums may be impressive. Between 2010 and 2013 alone, US$15,000mn worth of bonds were sold to international investors, according to Bloomberg. Peru is just a part of a bond bubble including China itself, as well as other members of the Troubled Ten.

Similar downgrades are being issued for other countries in Latin America and elsewhere. The government-backed debt of Brazil, not long ago a Wall St. high flyer, has been knocked down to a notch over junk.

This is not the case for Peru, which has just raised $2,000mn on Wall St at only 2.5% more than the rate paid by the United States Treasury. It is remarkable, looking back a couple or three decades, that loans of this size and price should have become routine, merely a note in the middle of the financial pages. The money is needed, this time, to shore up the government deficit that has appeared because of the slowdown of the economy, and they will certainly need more to fill an even bigger tax shortfall in 2016.

Another sign of homebrewed discomfort is that inflation is running strongly higher than the Central Bank’s target of 2%: it is probably higher than six percent. This week Mr. Velarde, executive president of the Central Bank, cited inflation, which he has a constitutional mandate to control, and the exchange rate as among his “growing fears.”

Peru’s Central Bank, the BCRP, and even the lame-duck Humala government, may want to take comfort from being in the same lifeboat as bigger, noisier countries. Peru is only three percent of the dollar investment to Latin America. Another way of looking at it is that Peru is being dragged down by the neighbors.

This is not going to persuade many Peruvians. They will remember that the economists at the Central Bank, BCRP, and the Ministry of Finance, the MEF, were predicting as recently as this past Christmas that Peru would be growing this year at a tear-away 5.6%.

This made no sense (PT, Jan 22 and 29, 2015) but set the scene for inappropriate policies. They should long ago have launched an emergency plan, with low Soles interest rates and a fast-track devaluation of the Sol, from S/.3=$1, as it was at the beginning of the year down to S/.4=$1, before the end of the year. This was the path taken by well-managed central banks like those of Japan and the EU, Canada, Sweden and Mexico. Instead, the Central Bank in Lima has moved the exchange rate only just a tad more than inflation, to just over S/.3.25, burning $1,000mn a month of dollars that are going to be needed 2016-2018. This is allowing bankers here and abroad to buy billions of dollars at a giveaway price. This questionable policy is why Peru has been dumped, as Bloomberg has it, into the bucket of the Troubled Ten.

Forget a recovery, even of the United States

There is no prospect that basic commodities prices will increase for years. Huge iron ore mines in Brazil and Australia will be producing at a loss. Oil will be priced at thirty-something dollars a barrel. Natural gas will be down to prices that only the huge fields in North America, Australia and the Middle East can do.

For Peru as for other third-level hydrocarbon areas, this means that the jungle oilfields and the Camisea gas fields are today, and maybe forever, worthless. They are, in today’s terminology, “stranded assets”, on the books as potential profit centers but in practice valueless.

Peru has great resources and fine prospects, in agriculture, for instance, as well as mining.

But in today’s world, Peru is nowhere for oil and gas. As part of a Peru emergency plan to ride out the recession, the government should close down Petroperu and write off the jungle gas and oilfields. Peru will be able to buy cheaper for years from Mexico, Canada and the United States.

Work on the Southern Peru Gas Pipeline should be halted immediately. This $8,000mn piece of corruption-ridden nonsense, being constructed by Odebrecht, Sao Paulo, whose chief executives are in jail for similar boondoggles at home, should be transferred to the Brazilian taxpayer.

Any expectation that the Peru economy might stay afloat is made unlikely by predictions in Lima, the United States and elsewhere that a big El Niño is beginning. Based on the experience of 1972, 1983 and 1997-8, this will subtract between two and four percent from the country’s output.

The good news is that a capable new government may take control in less than a year’s time, ready and able to turn the progress of the past several years to good account.

Published in English by the Peruvian Times on August 21, 2015.

A Spanish version of this article appears in Caretas No. 2399 under La Fiesta se Acabó

The Berlin Wall 1989, Peru Elections 2016

By Nicholas Asheshov

Deutsche Bank, DB, Germany’s flagship financial institution, has announced that for the past quarter it has lost $7 billion and for the first time in half a century it will not pay the dividend on which tens of thousands of German families rely. A big part of the loss is to pay fines by European and United States courts and regulators for dishonesty in London, New York and in Germany itself. The dishonesty consisted in part in selling clients valueless bonds and paper, and in rigging interest and currency exchange rates.

The latest losses follow years of criminal activities, as described by New York, London, and Berlin prosecutors, by DB among a dozen French, English, Swiss and U.S. global banks caught rigging markets. The money, the funny money, goes to directors and managers, not to shareholders much less to the tax collector. The DB announcement came a few days after Volkswagen admitted to fixing the exhaust emissions of its diesel vehicles. VW faces $20bn worth of criminal charges and trading losses. The head of VW, a 68-year-old engineer, said it was nothing to do with him. He has been replaced, taking $70mn in retirement benefits.

Lufthansa allowed earlier this year one of its planes to be deliberately crashed, killing 200 passengers.

VW, Deutsche Bank, and Lufthansa have represented German, European, world dependability and engineering and social responsibility. Ambitious capitalism toned down by worker and government involvement, a contrast to Anglo-American a ultranza combative corporations, ruthless but often as we see today, more open. Japan, so successful for a few decades after the War, is tight and closed and its famously turgid economy seems to reflect this.

It seems to be a similar story, perhaps, in the EU. VW, DB and Lufthansa have represented, created, today’s version of the European tradition.
Next door, in Switzerland, the Swiss president of FIFA, Herr Blatter, is being investigated by U.S. and Swiss law enforcement agencies as the head of a criminal organization, with its HQ in Zurich, running the world’s biggest, bar none, recreation business.

Long-respected Swiss banks like UBS, Union des Banques Suisses, and Credit Suisse are in court, like Deutsche Bank, for rigging the markets and running money-laundering and tax rackets. They also face charges of rigging precious metals and money markets.

Credit Suisse is raising $6bn in new capital to make up losses, as also is DB itself. Today’s shareholders are being watered down. They are losing part of their investment as well as their dividends. It is difficult to put together half a dozen names that have better represented the most reliable, responsible face of 21st Century capitalism.

Everyone also knows that the European banks, led by DB and the International Monetary Fund, have lent Greece $460bn and that every last euro of this has disappeared into new accounts at the same banks. European taxpayers will pay the losses via the Brussels printing presses. To put this in context, the total loans to Latin America in the 1980s banking crisis was under $200bn loaned to 15 countries with a population of 600mn. They paid it back, give or take.

The population of Greece is 10mn. Every Greek man, woman, and child should be sitting on $40,000. But many of them are hungry or worse, out of work, facing a daily invasion of thousands of war refugees from the Middle East.

It was just 25 and a bit years ago that Communism and the Berlin Wall collapsed. The capitalist West had won a 70-year confrontation. Good had vanquished Bad. Christian values had emerged as the dominant, indeed the only, world scheme. If it was not Christian, it was a first cousin, Liberal Democracy, the rule of law.

When the Berlin Wall fell in 1989, Peru was a failing nation, as is today, for instance, Venezuela. The government was collapsing, terrucos and cocaine cartels seemed to be taking over. Peruvians had to carry their money in shopping bags, wheelbarrows even.

A quarter of a century later, Peru is a liberal democracy with a solid financial system. It meets its international obligations. It has a lively line in corruption. But its best efforts are a modest, tropical shadow of the German and Swiss corporations, which have set out to cheat their customers and stakeholders.

The failed nation of 1989 has had elections every five years, since 1980 with a whoops to bring in the new millennium. In six months there will be another election. And another again, it’s reasonable to expect, in 2021.

This is not to say that Peru does not have a long way to go. Nor that the Germans and the Swiss are not thoroughly good people, world leaders in all sorts of valuable ways.

Many Peruvians would understandably harumph! at the “rule of law” clause that necessarily goes with liberal democracy. But just this week the Constitutional Tribunal with an occasionally fuzzy record, cracked down decisively on an attempt by Nadine Heredia, President Humala’s wife, to slide past due process with openly inappropriate legal maneuvers. Instead of skirting the issue the Tribunal quickly, decisively, cleanly blew the whistle on the lively Sra. Humala and stopped her efforts to avoid investigation by the courts into her colorful financial history.

It may be that the Tribunal will have done her a favor and that her financial doings may be less than meets the eye. But the point is that Peru has shown that when push comes to shove, as it certainly did in this case, the system has proven to be not only better than expected by most, but getting better than it used to be.

First published in the Peruvian Times, October 23, 2015


Peru Eurobond Issue— A Lemon, Shows Government Financial Confusion

By Nicholas Asheshov

The minister of Finance, Alonso Segura, is patting himself on the back for selling €1bn worth of bonds on the European market at 2.75% above the ECB base rate, which is as everyone knows an eyelash above zero.

This brings the amount borrowed by Peru on the international market this year to the equivalent of $4.5bn, according to official statements. There are two problems, more like half a dozen, with this.

The first is that this latest, huge issue, is going to be thrown straight into the black hole of the government current account deficit. It will not create a single new job. It will not build a meter of road, a school or a first aid post in the Sierra.

Instead, the Central Bank, the BCRP, will be slurping it up in just one month to pay foreign and local bankers to keep the Sol at or near its present damaging, unrealistic, and unsupportable rate — this week a centimo or two below S/.3.30=$1. This brings the devaluation of the Sol against the dollar in these first 10 months of the year to 10%, between a third and a half of the rate of respectable neighbors like Chile and Colombia. This means that dollars are cheap in Peru, and local and foreign bankers are buying them while stocks last.

One of many bad results from this short-sighted expensive policy is that the Peruvian economy has slowed much more than need be. Non-traditional exporters are closing, hundreds of thousands of jobs have disappeared and will continue to disappear long after some sensible action is taken, presumably with a new government at the end of next July. Government economists like to say that government money is different from the Central Bank’s. This is incorrect. It is in one pocket. Economists, like accountants, count the dead and like to put them in neat cemeteries.

The Central Bank has been spending dollar reserves at the rate of $1bn/month for the past two and more years, call it $25 bn though the real figures are fudged by issuing swaps in soles with a guaranteed dollar repurchase.

A second problem with the new Peru Eurobonds is that they are way overpriced, at 2.75%, and much too short, only 10 years. Minister Segura himself said he had received offers for three times the amount, over €4.2bn, a sure sign that they were too expensive, from Peru’s point of view, and too short. If the issue had been properly prepared, he could have sold them at 30 years, maybe more, and with a much lower interest coupon. Crummy risks like Portugal, France, Spain and Italy just pay the eyelash, without the 2.75% These days Peru is a much better risk than these and dozens of others. If the bonds had been 30- or 40-years, some of the cost would disappear into the distant mist of the inflation that will be needed to wipe away today’s round-the-world trillions in unbacked debt, the Greek holes snow-banking through the markets today.

Debt payments impact the budget but are not yet an issue for Peru reserves, thanks to the good fortune and decent management of previous governments. But Peru, like the rest of the world, is facing a future with the certainty that things will be slow for many years. The world economy is not growing even though virtually unlimited quantities of dollars, euros and yen continue to be issued. Today few businesses and governments are using capital or credit to invest in infrastructure like roads, schools and ports. Or in mines and agriculture facilities.

In the United States and Europe governments continue to insist on austerity, meaning roads are not repaired, much less built. In Peru austerity is not a policy but the public works agencies, mostly in the provinces, are not functioning properly. The result is the same. Instead, the economies of the world, capitalism itself, has become distorted, destabilized The only assets that have increased in face value with all the trillions of quantitative easing are shares and bonds on Wall St and the European, Japanese and Chinese bourses.

This is the dangerous financial world through which the government is wandering, babes in a darkening wood. They have been predicting, this past week, for instance, that next year will see Peru growing at 4.2%, according to the Central Bank, 5.6% according to the Ffinance ministry. Either figure is the other side of silly, a warning sign only that they intend to borrow more abroad. The government people did the same for 2015 as a way, as old as the Andes, of papering over the sure-thing hole in their accounts. Peru’s budget deficit is ballooning under the sparse cover of these ‘predictions.’
Today the problem for banks, starting with central banks, is to lend. Borrowing is easy, as the youthful Mr Segura has discovered, at the expense of Peru’s taxpayers over the coming decade. Italy, a financial sinkhole if ever there was one, is paying its bondholders negative rates. These accept this payment because they believe that Germany will pick up the tab. More worrying, the financial markets sense the possibility of deflation where their bonds will increase in value. Italy, by the bye, is the third-largest, after the U.S. and Japan, issuer of sovereign debt in the world and, if it were not for Brussels and the Bundesbank in Frankfurt, would be below Russia and way below Peru on a risk/reward balance, another of the new perversities of 21st century finance.

The new Peru bond issue is not just a mistake in financial strategy but a complete misconception of the world, and the Peruvian economy today. The BCRP in Lima today should be pushing, forcing local banks to lend, soles and dollars, euros, whatever.

Peru is not the same as the dead-in-the-water economies of Western Europe —Eastern Europe is a different animal— Japan and the United States. It could and should have an agricultural export business 10 times, for starters, of today’s: this is a better California. Its metal-working shops have been honed on supplying a big, by any standards, mining province. There is more, like textiles. These can compete easily in today’s ho-hum world economy even with the Peru cost of, for instance, out-of-date labor legislation. But they cannot compete where the Central Bank is gerrymandering the exchange rate —it should today be S/.4.30, not 3.30— and increasing, not decreasing, the cost of bank credit. Both these, devaluation and cheap money, are the only Central Bank options today. With the exception of disasters like Venezuela, Argentina and, increasingly Brazil, everywhere else, bar none, is using them. Right or wrong, this is the world 2015-2020 and Peru’s agro- and metal-based companies are being short-changed by the Lima government, the Central Bank and the four big Lima banks themselves, willing fools in Lenin’s phrase. These have turned themselves for the nonce into expensive exchange houses with the equally willing Central Bank’s approval: anything for P & Q until the new government comes in.

It is a new financial world out there, where it is not exactly that money no longer counts, but it is equally sure that no one any longer can count the money.

First published in the Peruvian Times, November 2, 2015


World Bank, IMF Meeting Opens Window for Peru’s Next Step Up

By Nicholas Asheshov

The World Bank/IMF meeting in Lima this coming week is the biggest, most prestigious get-together of the year for bankers and finance people. Anyone who is anyone from anywhere will be here, has to be here, and it is a great thing, for Peru. It puts the country firmly, perhaps a little unexpectedly, on the list of world centers, up there with Rio and Mexico City.

Peru’s finances and politics will take little of the attention of the ten or twelve thousand financiers and camp followers. But the reputation of Peru’s cuisine will fill the restaurants in Miraflores and San Isidro from midday to after midnight. Many of the visitors will want to take in Cusco and Machu Picchu. Good news as it reflects, as with the restaurants, the arrival of first-rate hotel and airline service, a true hospitality industry that did not exist even a decade ago.

The priority of the ministers, the central bankers and their aides will be to get a fix on what is happening to the world economy. They will be looking with increasing concern for guidance, ideas about what to do, once they get home. Not since the Lehman explosion in 2008 have government finance people in the emerging countries had to face the certainty of falling prices, falling production, falling employment and falling income.

Worldwide, only a small handful of countries — starting with India and the United States— is growing. Not much but at least moving forward. Europe and Japan are stagnant, with no immediate prospects of growth as are usually reliable heavyweights like Canada, Australia, and the Scandinavians. This group includes as respectable tail-enders Peru and Chile, Mexico and Colombia, Singapore and Indonesia with, as it may be, Iran about to join in.

The rest, led by Brazil, China, Russia, Turkey, and South Africa, not to mention the Middle East and Africa, are in recession or in open disaster.

Looking for ideas

The delegations from 150-odd countries members of the IMF and/or the World Bank will be hoping to bump into someone, perhaps from the international investment and commercial banks, who can give them ideas about how best to keep afloat for, it has become clear, at least the rest of the decade.

This used to be the job of the IMF and of the World Bank. Not so long ago the World Bank was the main inspiration for public works and infrastructure for Latin America and elsewhere. It was a full-service institution, much more than a bank, providing moral backing as well as technical expertise, funds and guarantees.

The IMF, a similar building of conference halls and honeycombs of offices across M St in downtown DC, provided emergency funds and financial backbone for governments in problems. This included big names like the United Kingdom, not just third world backsliders. It may be that many of the World Bank projects did not work as advertised. Certainly the IMF’s austerity demands often produced pain with little immediate gain. Europe, including Greece today, are inheritors of this tradition. But the notion that orderly public finances and statistics are a good idea and not just an imperialist plot has become standard issue to the enormous benefit of countries round the world, starting with Peru and in this often-bolshie neighborhood, Chile, Colombia, Bolivia, Panama, Costa Rica, and Mexico. It also included during the 1990s and the early years of this century, Brazil as star pupil.

Brazil — the 800-pound gorilla

But this year Brazil has become an 800-pound gorilla. At this Lima meeting it is not China that has already joined the other elephants like Japan and Europe, but Brazil that will be a feature of concerned conversation.

A couple of years ago Brazil had become the world’s seventh biggest economy, a few pounds ahead even of the United Kingdom, a century ago the world’s greatest. Until earlier this year it seemed to the financial markets as though Brazil could treat the commodities slump like a road-repair diversion. It could have been thus. Instead, “We got hit by a turtle,” a disgusted Sao Paulo executive told the Wall St Journal this week. Brazil is turning into an international mega-problem. It is not just that Brazil’s public finances are in tatters. . . Infrastructure like roads and water supply is in deep disarray, with crime rising. National and regional politics, traditionally complex, are disintegrating with the opposition as weak as the government itself.

These days this is not just another colorful third world sad story but one that could detonate a run on the international credit markets This week here in Lima the single biggest topic of discussion will be how to prevent or at least postpone a Brazil debt default.

Not so long ago it was the IMF that could put out the fire. But today the credit markets are huge and unstable. The money that has gone, virtually uncontrolled to companies in Brazil, China, Turkey, and South Africa went often into ventures that do not work, often mines and hydrocarbons facilities which themselves have created today’s low prices. It is no accident that the copper price has moved below its 200-month moving average, setting the tone, too, for the other industrial commodities.

At the beginning of the week, the bonds and other debt issued by Glencore Mining dropped along with its share price by 30%. Glencore, with a long association with Peru through Xstrata and Marc Rich, developer of the massive Antamina and Las Bambas copper mines here, saw its market value at $16bn, down from $80bn earllier in the year, and its debt at just under $50bn — huge numbers and huge dislocation.

Other mining and hydrocarbons companies, including BHP Billiton and Anglo American, are developing the same kind of dislocation between the productive value of their assets and their ability to service the debt paper bought with enthusiasm not long ago by investment and retirement funds in Europe and the United States. Top of the list are Petrobras and Vale do Rio Doce. Petrobras debt today is, at $470bn, 10 times greater than Glencore, one of the world’s biggest.

Wall St analysts say they have always assumed that the Petrobras debt is backed by the government, but famously Brazil’s sovereign debt has itself been marked down by the rating agencies to junk. By coincidence, the foreign debt of Greece is within a dollar or two of Petrobras’ obligations. In the case of Greece, of course, every widow’s mite is going to be picked up by the German taxpayer.

$60 trillion in debt issued worldwide since 2009

These are just straws in the IMF and World Bank’s headwinds this week though, there’s plenty more of the same. For instance the IMF itself has published a report saying that $18 trillion — i.e. $18,000,000 billion, give or take— in bonds and similar have been issued by companies in China, Brazil, Turkey, up from $4 trillion in 2004, and warns that a lot of this is held by US mutual funds. This in turn is part of the $60 trillion in debt that has been issued worldwide as of 2009, over and above whatever it had been before that.

This is the context of the IMF/World Bank meeting here this week. If economies around the world were growing as they did from 2009, then lenders and investors could as usual suspend their disbelief. But the IMF itself has said that it will be lowering, again, its growth forecasts for the coming few years so the lack of connection between reality and the credit markets has become even clearer, China or no China.

For sure the tip-top bankers and economists, investors and traders here are aware, convinced in fact, that it is them and not the elected politicians who are in charge What sets the annual IMF/WB meeting apart is that there is more to it than just international bureaucrats, paper-pushing government officials and the blank-eyed economists and lawyers who run central banks. The juice, and the big money, for this meeting comes from the investment and commercial bankers from Wall St., London, Frankfurt, Toronto, Tokyo, Sao Paulo who come to meet each other as well as government officials. The meetings take place at dozens of cocktail parties, buffet breakfasts and lunches and, naturally, cups of coffee and drinks at the bar. Lima’s main banks, the Credito, Interbank, the BBVA Continental, and Scotiabank are putting on big shows.

Two out of every three years the WB/IMF meeting is held in Washington itself where there is a well-oiled hospitality industry. Traffic is a known quantity. The hotels are geared to big-name conferences. It is easy to get things done. Phones and taxicabs work. Then one in every three years the meeting is held away from home. It might be somewhere well-organized like Berlin. Or Bankok or Lima with dreadful traffic and security worries. Lima is more of an adventure but that adds spice.

There will be real interest for the participants in the Prospects for Peru as an up-and-coming junior BRIC. The collapse of Brazil, joining Argentina and Venezuela, means that Peru, Chile and Colombia will have a chance to shine, to provide, along with Mexico, the main positive focus in Latin America, a valuable door-opener for the coming decade.

First published in the Peruvian Times on October 2, 2015

S&P Shot across the bows for Peru banks and government

By Nicholas Asheshov

The downgrade in New York by Standard & Poors, S&P, of Peru’s banking system last week came a day before S&P whammed the Brazil government debt to junk.

The Brazil move is a much bigger hit to a much bigger player but the Peru bank rating is a new sign that Peru is being priced firmly down even though its numbers are better than those of most of the neighbors.

The bank downslide came days before the Minister of Finance, Alonso Segura, was in New York to try to talk Morgan Stanley’s MSCI unit into postponing its decision, announced last month, (PT, Aug.21, 2015) to push the category of the Lima Bolsa de Valores, the stock exchange, from Emerging Market out to Frontier. Other countries to which this has happened this year include Morocco and Argentina.

Peru’s handful of international-style companies, like the Banco de Credito (BAP), Cia de Minas Buenaventura (BVN), Southern Peru Copper (SPCC), Graña y Montero (GRAM) and Hochschild (HOC) among them, are quoted in New York or London. But the downgrade of the Lima exchange will have a negative effect on the finances of the AFPs, the pension funds which by law are forced to invest in local paper.

A warning and further downgrades

The latest bank ratings are shots across the bows of the government and of its creditors — there is no question about the stability of any of the four main Lima banks, the Credito, the Continental, Interbank and Scotiabank. But it means further downgrades by the New York rating outfits like Moody’s and Fitch are possible as Peru’s economy continues to slow down. The rest of the Emerging and Frontier world is slow and getting slower, too, but the main reasons for the latest S&P bank ratings is the poor performance of the government and of the Central Bank in Lima.

The immediate practical effects are a bruise rather than broken bones. It will add, perhaps, 50 or 100 basis points, getting on for one percentage point, to the still-cheap cost to banks here of borrowing in New York. This is currently around 4% to 5% p.a., a gift by the standards of other times.

The change in status comes, too, as financial markets everywhere see-saw with a general trend down. Commodities, products and companies are being reassessed. De Beers has reduced the price of its latest gem quality diamonds by nine percent. Silver continues below $15/oz, less than half the price of 2013, gold at under $1,100 instead of $1,900, and copper at $2.30, half its price three years ago.

S&P says the quality of the Lima banks’ business will get worse as the economy deteriorates.

This is another way of saying that the quality of the balance sheets of Peruvian companies is seen by S&P as deteriorating too, in line with the mishandling of public finances by the Ministry of Economy and Finance, MEF, and the Central Bank, the BCRP.

Dangerous increase of reference lending rate

Part of the problem is that the Central Bank continues to prop up the price of the Nuevo Sol, spending $1 billion of its reserves every month. Last week it revalued, not devalued, the Sol, from S/.3.31=US$1 to S/.3.21 defying, perhaps with a certain sense of humor, international financial gravity.

In the same vein but even more questionably, the BCRP increased its reference lending rate from 3.25% to 3.50%, signaling too that this will go to over 4.25% next year.

The reason for this startling move is to rein in inflation. It will have, in fact, no effect on inflation though it will slow the economy, increase unemployment even further, raising the possibility of a return of the stagflation of the 1970s and 1980s, a specter that is becoming a reality in Brazil.

Elsewhere, starting with China, those central banks where the reference rate is not already close to zero are lowering rates to as near-zero as they can in a well-established effort to blow life into sagging economies.

The increase by the Central Bank in Lima of the reference rate is dangerous to the point of incomprehensible. The experience of the past five years has been conclusive that the old monetary buttons to control inflation, which rarely worked anyway, today turn out to be a well-aimed shot in the dark straight into the foot. Instead, increasing rates produces in today’s leveraged markets a sharp halt, a sudden stop. With it comes deflation.

This happened famously in 2011 when the European Central Bank raised rates and produced an instant Europe-wide recession. Other countries making the same mistake in the past few years have included Norway, Sweden, Israel and Australia, all of which quickly had to do a U-turn and reduce rates to stave off a collapse in their economies.

Now Peru, with a government and Congress focused on other issues, is allowing a crew of olde economists to make the same mistake.

The Central Bank in Lima also continues to squander its reserves on propping up the price of the Sol. Everywhere else they are cheapening their currencies against the dollar, starting with the Chinese, the ones who are supposed to be buying Peru’s copper, Venezuela’s oil and Germany’s BMWs.

But there are no signs of a recovery in the world economy. The price of copper edged further down towards $2/lb.

At that price Peru’s budget deficit in 2016 will be 5%, as a proportion of GDP, not just the two or three percent that the government says it is projecting. Peru’s government has been in surplus for the past dozen years.

Peru and Brazil

Peru’s situation has some similarities with Brazil. Government finances in both are getting worse due to mismanagement and to the fall in commodities prices.

But Peru’s financial and political problems, however grimy as seen from Lima, are nothing compared to those of Brazil which is already into a solid recession with a surge in inflation.

Another difference is that Peru will have a new government in less than a year. In Brazil it is a lame duck government mired in confusion with the best part of four years to go, and with no Plan B. Peru’s total foreign debt, public and private, knocking on $40 bn, is a tiny figure compared with Brazil. For instance, Petrobras alone owes $135 bn — it is one of the world’s biggest issuers of bonds. The cost of insuring Brazil bonds against default is today as bad as Turkey and Russia. The Peru cost is, rightly, insignificant, a big change from 20 years ago and a huge difference from Brazil, Venezuela, Argentina and Ecuador.

There are two big problems for the Peru outlook. The first is that the world economy shows no sign of improving. The only country in the top ten doing well is India, at 7%, with the United States, Germany and the United Kingdom as also-rans at between two and three percent who dare not increase the cost of government credit from zero for fear of tipping back into recession. Brazil and Russia are in recession and financial distress. China has lost the plot and will be in no shape to rescue the third world or anyone else —Russia for instance— for a decade. The rising China tide that raised commodity boats so far this century is flowing back down and out, taking —for the moment, at least— Peru with it.

Citibank said this week that there is a better than evens chance of a world recession.

There’s not much Peru can do but prepare for this El Niño-sized rainy day.

Instead the government, at the end of its tether, is acting as if it believed its own starry-eyed projections. This includes putting soles interest rates up to slow the economy. The Banco Central economists apparently believe their projection of four percent growth for 2016 even though a recession is a certainty. They are putting on the brakes, the only country in the world to be doing so.

The banks 

Last week S&P said it had revised its Banking Industry Risk Assessment on Peru to group ‘5’ from group ‘4’. S&P also revised its rating for banks operating only in Peru to ‘bbb-‘ from ‘bbb’ due to a higher economic risk.

  • “We revised our economic risk score to ‘6’ from ‘5’. We consider that economic resilience has weakened amid lower growth prospects.
  • “The trend.” on economic risk remains negative because we’re still concerned that rapid credit growth could increase economic imbalances risk.
  • “As a result, we’re lowering our ratings on five Peruvian banks.”

Standard & Poor’s Ratings Services lowered its ratings on the following Peruvian banks: Banco de Credito del Peru; Banco Interamericano de Finanzas S.A.; BBVA Banco Continental; MiBanco, Banco de La Microempresa S.A.; and Banco Internacional del Peru —Interbank.

S&P said it was not, however, marking down Scotiabank —three years ago the Bank of Nova Scotia, the controlling partner, increased Scotiabank’s capital.

The S&P report continues: “The downgrade (of the banking system) reflects our view of rising economic risk for banks operating in Peru. The greater economic risk reflects our reassessment of Peru’s growth prospects. We believe that Peru’s growth trajectory will no longer be consistently well above that of its peers with a similar stage of economic development.

“Also, our trend on economic risk remains negative, reflecting the persistent rapid growth in credit and private-sector leverage in the past few years, which has been weakening the Peruvian banks’ credit quality in the past three years.

“In our view, domestic banks now face tougher operating conditions, which we believe weakened their financial profiles, notably in terms of asset quality and capital and earnings.

“We expect growth to average 3.7% annually between 2015 and 2018 and to average 2.8% in per capita terms, which will protract Peru’s catch-up with more developed peers.

“We now expect Peru’s economic growth to be slower absent more successful concerted efforts to advance structural reforms to keep up productivity improvements and continue to increase social inclusion, such as improving labor market flexibility, infrastructure, reducing bureaucracy and informality, and improving education quality.”

Wall St does not seem to be taking its own warnings about Peru too seriously.

Analysts at Morgan Stanley, the New York bank that is downgrading Peru from Emerging Market to Frontier Post, is recommending clients to buy shares of the Banco de Credito, Credicorp (BAP.N): and predicts an impressive 40% profit by the end of next year.

MS says the Credito offers an “attractive Risk Reward”, predicting that the shares will go from today’s $107 to $150 by the end of 2016.

The MS Buy recommendation came only days after S&P’s rating downgrade of Credicorp from BBB to BBB- because of “rising economic risk for banks operating in Peru,”

“reassessment of Peru’s (lower) growth prospects,” “weakening credit quality in the past three years,” and “persistent rapid growth in credit and private sector leverage.”

MS Peru bank analysts see Peru’s economy accelerating to the 3-4% GDP growth range, fastest among the large economies in Latin America.

Nick Asheshov was editor of the Andean Air Mail & Peruvian Times during the 1970s and 1980s, and of The South Pacific Mail, Santiago during the 1990s. He was Latin America Editor of Institutional Investor, New York over the same period. He lives in Urubamba, where he writes a blog and where he has been prominent in the hotel and railway business. 

This article appeared in the Peruvian Times Sept 17 2015

Sell, Collect your Money, or Go to Jail

Lofty principles, sacred promises, the public interest, the Constitution, and democracy itself are at stake in a heavyweight bout between El Comercio and La Republica. The dispute is about which of them should control Correo and Ojo, two of Peru’s biggest and best newspapers.

By Nicholas Asheshov

(From Caretas)

(From Caretas)

The fight is, of course, about money and power. Today in Peru, unusually, circulation is much bigger and more valuable than ever before. Peru is in the run up to a wide-open presidential election in 2016 and this is one of the first big skirmishes of the campaign.

HumalaMaquillaAmazingly, in the electronic age, Peru is a fast-growing, feisty newspaper market. Millions of unlettered 20th century families have morphed into 21st century householders and straphangers. The straw shacks of two and three decades ago are today brick and cement and not just in Lima but in Arequipa, Ica, Chimbote, Trujillo, Chiclayo, and Piura.

While The Washington Post has had to be rescued by an electronic biz kid who probably doesn’t touch a newspaper from one week to the next, El Trome El Comercio‘s zappy down-market tabloid – has tripled its circulation in just five years to 650,000. It is read by the new commuters, including the chauffeurs and maids of the people who read and advertise in the Establishment’s El Comercio. El Trome is read by one in three newspaper buyers in Peru. This is over three times more than the numbers who read the company’s flagship El Comercio (94,000) together with its less turgid stable mate Peru21 (87,000).

In Peru, each copy has a readership of perhaps four or five. The Internet has a still-low penetration of around 25%. pe_republica.750

There are, or rather were, three Big Newspaper groups in Lima. These are, or again were: El Comercio, the tough, rich Establishment leader; La Republica, the left wing group; and the Agois-Banchero group’s middle-of-the-road Epensa, featuring Correo and Ojo. Today, Epensa is just a nameplate.

In July, La Republica’s financial backer, Salomon Lehrner, had quietly arranged to buy out the Agois’ 93-year-old major Epensa shareholder, with 54%, for $17.2M, a bargain. In August El Comercio muscled in at the last minute with $18M, including an $800,000 pourboire for Apoyo, its bankers. Still, a giveaway. They got the deal.

Overnight, El Comercio’s share of Peru’s newspaper market went from around 50% to 80%, more than that of Beijing’s The People’s Daily.

Here, in this case, notwithstanding the adage to the contrary, otorongo no come otorongo, as things stand, El Comercio – more, an anaconda than a quick-footed mountain lion – has swallowed, in a single cheap gulp its only competitors, market leaders Correo and Ojo, both of them livelier and more market-friendly than its own products.

This is not good for the newspaper business in Lima. It is, in fact, a disaster. It gives the Comercio group four out of every five newspapers, and the deal would have been unhesitatingly thrown out of Anti-Trust court anywhere in Europe or North America. Anywhere, indeed, this side of Iran. Even Pravda Granma never had 80% of the market.

Correo’s market is A and B, Ojo’s is C and D. Correo and Ojo have been growing, fast. Ojo, a feisty tabloid has doubled its circulation lately to 300,000 Correo is, at 155,00 and growing, easily the market leader in the A and B level, triple that of La Republica, (45,000), the left wing tabloid.

Leaving aside for a moment the unfortunate readers, advertisers today have a choice of ONE. As Henry Ford liked to say: you can have any colour you like so long as it’s black.

Journalists who don’t see eye to eye with the numerous Miro Quesada family, El Comercio‘s patriarchal owners, will be out of luck and a job. Politicians who don’t get the nod from the Miro Quesadas will be in the same boat, offshore and heading west.

The Miro Quesadas say they will not interfere in the journalistic side of Correo and Ojo. As we used to say in Fleet Street, “pull the other one, it’s got bells on.” Rupert ‘The Dirty Digger’ Murdoch, my old employer, said the same when, in London, he bought The Times, The Sunday Times, The Sun, The News of the World and, in New York, The Wall Street Journal, among a hundred others elsewhere. Today his people, courted and employed by every prime minister since Margaret Thatcher, are being sent to jail in London for behaviour disgraceful even by Fleet Street’s flexible standards.

The Miro Quesadas are the cholo version of the Murdoch tradition, memorably cartooned as Lord Copper of The Daily Beast in Evelyn Waugh’s classic Scoop.

For decades the Miro Quesadas carried on a deadly vendetta against the big up-the-workers AAPRA party and have enthusiastically backed every golpe militar within living memory. They helped oust President Belaunde’s democratic government in 1968. Velasco’s military whipped round and nationalised El Comercio as well as the other dailies.

Belaunde, a gentleman, returned El Comercio to the Miro Quesadas the day that he returned- to the Government Palace in 1980.

Today’s El Comercio, with its bland, deviously cryptic front pages, is a well-established formula in Latin America, like the Edwards family’s El Mercurio in Santiago and their equivalents in Buenos Aires and Ciudad de Mexico. A rich, sad bunch of Little Murdochs. The Miro Quesada newspapers do a poor job of reflecting the realities of Peru, one of the world’s most varied, fast-moving, and fascinating countries.

La Republica’s journalistic tradition is a little better, but not much. It was, for instance, anti-Fujimori i.e. anti-political gangsterism. But it has been quiet about the vote-rigging, phony finances, and corruption associated with Presidents Toledo and Humala, its political friends. Salomon Lehrner, a La Republica financial angel, has been a backer of Toledo and Humala and has built up a colourfully disreputable financial reputation, outlined more than once in Correo, over the past few decades.

However, La Republica, an attractively laid out full-service tabloid, is at least livelier than El Comercio. Circulation figures show, however, that it is a poor representative of the 50% of voters who regularly place their confidence in populism, which is what’s left, as it were, of the Socialism of the long-gone 20th century. It is, in the A & B range, outsold three-to-one by middle-of-the-road Correo. It was Correo, for instance, that broke the US$50M Toledo scandal: this features a bankrupt Israeli-Peru financier Josef Maiman, with whom Lehrner has worked closely in the past. Lehrner helped finance Humala’s campaigns in 2006 and 2011 and was Humala’s prime minister for the government’s first months.

Curiously, El Comercio and La Republica are partners in the market-leading TV Channel 4, El Comercio with 70%. This has been returning annual profits of between $15 and $20M, important to La Republica’s cash flow.

Gustavo Mohme, La Republica’s publisher, is a well-established construction figure. El Comercio is associated with Grana y Montero, Peru’s top construction company, quoted since 2013 on the NYSE.

La Republica is understandably upset about losing the Epensa deal. which Lehrner had engineered through a backstreet notary in the no-go Lima district of Puente Piedra. But La Republica’s directors would never have kept their left-wing fingers off middle-of-the-road Correo and Ojo. People with a political agenda, left, right and centre are boring and newspaper readers everywhere, of course, know it.

El Comercio will surely be told by even the most susceptible magistrates. that their protestations of good faith are meaningless, even if they claim that they are nice-guy reformed characters.

The magistrates will, we can hope, crossing our fingers, tell them that they have to sell their new prize, but will tell La Republica that they cannot be the buyers.

President Humala has weighed in on the TV, saying that the purchase of Epensa by El Comercio, “an octopus,” is in every way wrong and that he is drafting a press law. Lehrner and others have chimed in but this would, as we all know, make things worse. The answer is to tidy up Peru’s well-intentioned but confused anti-trust legislation. All that’s needed is to copy the European Union legislation, already in Spanish, under which corporate fusions must be routinely cleared by the regulators, in this case Indecopi, which often works quite well.


Nicholas Asheshov, Editor for many years of the Peruvian Times and The Andean Report, worked on Fleet Street for Lord Rothermere’s Daily Mail, Rupert Murdoch’s Sunday Times and for the Financial Times, and Institutional Investor. He lives in Urubamba and in 2010 broke Orient Express’s Peru Rail Machu Picchu monopoly.

Published in Spanish by Caretas on Jan. 9, 2014

Nelson Mandela and my Austin Healey

Low riding Healey

Low riding Healey

Urubamba Dec 2013

Caretas – Country Notes

By Nicholas Asheshov

I arrived in Johannesburg a few weeks after Nelson Mandela had been sent off for life to Robbin Island.FOr most of the two million Whites in South Africa, and for many even of the 11mn Blacks, this was a relief, a solution. Mandela was an Extremist, a Communist, a troublemaker…

I had a one-room flat in Hillbrow, a lively bohemian quarter a dozen blocks from the -centre where the offices of the Jo’burg Sunday Times had its offices and where I had found a job as a reporter. Later I transferred to the Jo’burg office of the Associated Press, nearby.

On Saturdays and Sundays I lived it up in the cafes and pubs of Hillbrow and played tennis and swam in the rich swimming pools of the White northern suburbs.

My contact with Blacks was almost nil. When I had arrived, on a flight from Lagos, I was house-sitting for a friend, a lawyer who had the painters in. The painters were, of course, Black. They called me “B’ass” boss. They were nice chaps. Me, just arrived from England and indeed three years in Peru and Brazil, told them, “I’m Nick.”

“Yes, B’ass.”

Later, in my flat in jolly Hillbrow, today black and white and thoroughly dangerous they tell me, I had a plump Black lady, Sophie, who cleaned for me and other people in the building. By then I had acquired a noisy sports car, an Austin Healey two-seater, which had lost its cockpit hood. If it rained, I got wet. I had offered to take Sophie back home to Soweto, the massive Black township. This was not just Brit kindness: I needed an excuse to go there. It was just as prohibited for Whites to go to a Black area as it was for Blacks to be in a White area, like Hillbrow, without a pass. The Pass Law was a cornerstone of apartheid and once I got arrested, by a black plainclothesman, for taking photographs of a roundup of illegals. The black cop did not call me B’ass.

Finally I got Sophie to agree, to the Soweto trip; though she had never seen my car. In the street the dented but gleaming Healey was parked and ready. I opened the little passenger door for her.

She was appalled. “Where am I to sit, Boss?”

The Healey had a tiny thin back sort-of seat for a cat and a thin briefcase. Sophie, was matronly. It had not occured to me, and why would it, that she would never want to sit next to me. The passenger seat, like the driver’s, placed the passenger’s bum nine inches off the road. Sophie could not conceive of sitting anywhere but in the back. She got in but hated every minute of it, especially when we got to the dreary, dry Soweto (South West Township). She refused absolutely to allow me to drive her to her home, children, husband, and neighbours.

In the parks, of Jo’burg, Pretoria, Cape Town, everywhere, the benches, side by side were stencilled ‘Nur Blanke’ or ‘Nur Schwarz’: Afrikaans was the language of apartheid. Buses, trains, restaurants, everything was segregated. Taxi drivers where white for whites, black for blacks.

The Sunday Times, like its sister the Rand Daily Mail, was anti-apartheid. But this did not mean that they were in favour of, of Blacks running the country. Whatever it was that they wanted, it, as we know, never happened.

My lawyer friend was once defending a Portugese carpenter who had been caught having sex with a black girl, a criminal offence. Barry, my friend, asked me to appear as an expert witness to tell the judge that the carpenter in his native Portugal could never imagine that inter-racial sex was illegal. I think he got off, though no thanks to me.

Visiting Japanese were honorary whites. Chinese were also-rans as Coloureds, as were Malays and Indians.

Once I wrote a story, ‘The Case of the Sun-Tanned Settler,’ published worldwide, about a Greek immigrant who was denied entry by the authorities at the port of Durban because he had been suntanning himself on the three-week boat voyage. through the Red Sea and was now too dark.

The potential for violence was not just from the Blacks. Not long after Mandela was sent to Robbin Island, a white teacher called Harris was hanged for a protest bomb, which killed several people in Johannessburg main railway station. The Sunday Times was firmly in favour of the sentence.

At around the same time, a rich English South African farmer shot President Hendrik Verwoerd at point-blank range at an agricultural show, but the shot did not kill him. My friend Don Royle of the AP got the only photograph of the apparently dead Verwoerd, lying on the ground. Verwoerd, a bleak, pompous figure, was widely despised outside the Afrikaner community. His wife was rather dark, and a daughter was clearly mixed race and newspapers were not permitted to run photographs of her.

Nelson Mandela was promoting armed revolution and so was a commie agitator. He was Black, for sure, but it was worse; he was trying to upset the established order where we were on a knife-edge with the Russians and the Chinese Commies.

Not to mention Fidel Castro. The Bomb and missiles were the currency of international conversation. Vietnam was just around the corner. These were the years, 1964-5, when Birmingham Alabama and Martin Luther King Jnr were a centre of the great revolution of the ‘Sixties when not only Blacks but Women and Gays were beginning to emerge as normal people. Indeed, the Young were suddenly, for the first time, flowering all over Europe and the States.

Later I drove my Healey across the wonderful rolling farming country of the Transvaal and Swaziland, British and Black, to Lourenzo Marques, the lively port capital of Mozambique, then still, like Angola, part of the Portugese Empire, under the dictator Salazar — like Franco, a good, upstanding non-Commie.

In Lorenzo Marques I talked to middle-class White anti-imperialists. These all, in South Africa too, called themselves Progressives. In the evenings I joined white South African Boers in the exciting port bars where black girls –and boys for that matter– were, unlike in South Africa, very much part of the scene. What a party! A bit like Brazil. For the first time in a year I got a whiff of wonderful Africa.

Speeding back at night across the lonely, wide-open Transvaal, I flipped the Healey and, unconscious, was rescued by the police who took me to a local hospital. I woke up after a day or two. There were a couple of uniformed cops on my door. They had found pro-Independence — i.e. communist — literature in my car.

Back in Jo’burg, I was ordered to report to the SB, the feared Special Branch, HQ. I was luckier than most. I was released. Evidently I did not belong to what Graham Greene* called famously “the torturable class.” But a week later, I forget how, I was warned and I ran bumpety-bump at 3:00 a.m. in the poor Healey for the airport and caught a cheapo charter seat in an old Constellation four-prop, via Luanda and Majorca, for London.

The Associated Press was not amused. It had not been my job to create problems with the authorities in Pretoria. Luckily,, I got a job on the Daily Sketch, on Fleet St,, a Conservative tabloid owned by Viscount Rothermere and his wife “Bubbles. They evidently considered my flirt with revolution in Africa as just a youthful fling.

It was to be three shameful decades before the collapse of the Berlin Wall allowed Nelson Mandela, who President Obama rightly calls the Liberator, to be released to allow him to give South Africa the beginnings of a chance.


**Greene’s ‘torture’ remark came in Our Man in Havanna. In The Human Factor, a spy thriller, Greene features apartheid Johannesburg including a black girl who escapes with and marries an MI5 Brit who is also a KGB agent.

We all like Chocolate, and it’s good for you

By Nicholas Asheshov

Peru could and should be one of the great chocolate-producing countries, and a new Chocomuseo in Calle Berlin, Miraflores is aiming to push this idea a step further.

The Miraflores Chocomuseo follows the Numero Uno Chocomuseo in Cuzco, a roaring success. I have been to the Cuzco one a couple of times, the latest earlier this week, and it’s full all the time. Here, in an old building in the centre of town just off the Plaza Recojijo, you can watch them roast and grind the cacao beans, known as nibs and add organic sugar produced in Piura, and a score of fillings, from corn and aji to sauco, lucuma, maracuya ,ahuaymanto, raisins, nuts, coconut . There are a few tables where visitors can eat thick, sweet, rich chocolate paste with a touch of aji –a Maya idea– and hot tea made from the husks of the cacao beans.

One of the liveliest features of the Chocomuseo here in Cuzco is the two-hour course in how to make chocolates. You start learning about how and where cacao orchards do best, which is down in the hot-house end of the jungle anywhere it is well over 21º C. and where there’s plenty of water and humidity A couple of hours later you walk away with a simpatico bag of little chocolates that you yourself made by pouring warm paste into moulds where you have put your favorite fillings. Good deal for S/.70 and the tourists love it.

The Cuzco ChocoMuseo was set up by Alain Schneider, a 27-year-old Frenchman, and his partner Clara Isabel Dias, also French. After studying engineering at universities in France and working for Air France, Alain and Clara went to Nicaragua where, after doing NGO work, they set up the first ChocoMuseo in Granada, a colonial town. Then came Cuzco two years ago and, later, Antigua Guatemala, and now Miraflores with more to come in the Dominican Republic, Costa Rica and El Salvador, and doubtless, elsewhere.

Over a cup of, naturally, chocolate, here at the Cuzco Chocomuseo, Alain, told me something of what he has learned about the cacao and chocolate business in Peru, in which he is today an important player.

Alain is one of those charmingly lively French boys, who is also well-organized enough to be running an international network.

“Every three days we have a Skype conference with the managers of each of the Chocomuseos where we go over the figures and discuss what’s working and what’s maybe not,” he says

So here we have the Internet, French chutzpah and talent, and Wall Street producing a charming, lively useful money-spinner which is sure to provide the basis for new businesses, perhaps chocolaty and perhaps not. There’s home-made beer, for instance.

Alain mentions, too, a friend who is setting up a Pisco Museum –we used to call it a bar, but these days it has to be called, something toney.

One of the things that Alain and Clara Isabel have found is that in Peru getting their hands on a steady supply of good cacao beans is not that easy. “An early lot we had from Quillabamba was fine. But the next lot we had to throw away, no good,” he says.

Here in Urubamba, I have had the same experience. The other day I bought a bar of chocolate-cacao paste under the brand name of COCLA, but it was so bad that it went into the rubbish. Cocla is the big coffee and cacao purchasing group based in Quillabamba. This has produced an unusual and certainly unwanted situation. The Cuzco Chocomuseo buys no cacao from down-the-road La Convencion, where a lot of cacao is produced. Instead, Alain Schneider is buying it mostly from a supplier in Tocache, a pueblo on the banks of the great Rio Huallaga, well to the north and downstream, of Tingo Maria. It is here that cacao and chocolate takes on one of two important political roles. As everyone knows tocache is a centre for coca plantations and the cocaine industry and at least until last year, an operations focus for Sendero Luminoso, both feeding off each other. Now USAID and others have been pushing cacao as an alternative to coca, and have introduced a hybrid variety, CCN51 which is a good producer but the flavor, Alain Schneider tells me, is nowhere near as good as the traditional ‘chuncho’ native Amazon varieties.

I first visited Tocache in 1982, riding upstream from Juanjui in a powered canoe that was doing a bus service up and down this great river. Then Tocache was still a sleepy village. Three years later it had a Banco de Credito branch where locals would take in bagfuls of $100 notes and receive, in exchange, Credito bearer certificates of deposit. Twin-engined planes bound for Colombia buzzed across the dawn skies, ushering in an uncomfortable three decades of wealth and violent death.

But today Alain Schneider buys his six tons of cacao beans from Tocache, indicating a much more positive future for one of Peru’s pleasantest and most bountiful regions.

He also buys some in Piura which, although it is on the Coast, is just a couple of degrees south of the equator.

Cacao has another positive political characteristic. It is naturally an Amazon tree and, like coffee, needs shade from higher canopy-style trees, like mango, avocado, and orange. This means it is ecologically better than most other jungle farming, like cattle, soya, sugar and oil palms. All these, like coca for that matter, see the forest razed and replaced with boring mile upon mile of mono-culture, only marginally less damaging to the world than a layer of cement. Under a canopy is how the good cacao, rather like coffee, is cultivated anyway: Other places that produce good cacao include Ecuador and the Caribbean coasts of Colombia, Panama and Costa Rica where the plantations are often right on the beach. Brazil’s Atlantic coast around Salvador de Bahia is also a famous producing area. The big West African and Southeast Asian plantations are pretty awful, however.

Amazon and Central American cacao from the native chuncho criollo and trinitario varieties has a noticeably better flavor and is used for the best Swiss, Belgian and French chocolates. This is partly, it seems, because if it is done properly, the fermentation of the cacao seeds, gives them a flavor that cannot be equalled by the hybrids either here or in Africa.

The fermentation is carried out in boxes with the fruity pulp and then the seeds are dried out in the sun on concrete or hard earth. The seeds are then transported to the United States, Europe, or to chocolate-makers like, now, the Chocomuseo. .

Peru chocolate has been getting a publicity lift from Astrid Acurio, glamorous wife of Gaston, Peru’s maestro chef, under the brand name Melate.

“Our new Chocomuseo in Calle Berlin will, we hope, make Peruvians more conscious of just how good their chocolate can be,” Alain Schneider says.

Also, chocolate is good for you. Studies carried out in universities and health research places in England and elsewhere have proved, it seems, that chocolate is awes choice for couples seeking to increase the quality of their relationship. More research, clearly, needed.


First published in Caretas in Spanish, the week of September 20, 2012

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’.

Planes, Trains and Boutique Hotels

By Nicholas Asheshov

July and August are always the top weeks of what has become a year-round rain-or-shine season for the Cuzco tourism industry though things have been slow following powerful flash floods in January. Global-warming rains suddenly quintupled the volume and speed of the monsoon water in the Rio Vilcanota, the one that wraps around Machu Picchu, slashed out big slabs of the narrow-gauge railway line that chugs tourists from Cuzco over the mountains and down a dramatic canyon to the ruins.

Machu Picchu Cut Off! Tourists are increasingly coming to see other things like the Manu and Iquitos jungles, the Nazca Lines, Lake Titicaca. Whatever: no Machu Picchu, no tourists.

The railway, a concession run by Orient-Express Hotels, OEH, is, six months later, not fully operational but the last 25 miles is open again with crawl-along speeds on the recently-repaired bits. But, hey, who cares if it takes a half-hour extra to get to such a stunning destination. Presumably by next year it’ll be back to rock-a-bye normal where on the only straight stretch top speed at the best of times is 25 mph.

This year, on this evocative little line another change is taking place. The Orient-Express monopoly is ending, a subject on which I am a world authority as a founding Director of Andean Railways Corp, the feisty challenger. We led a ferocious three-year regulatory battle against the PeruRail –Orient Express– monopoly. Today it’s all smiles, a bit guarded for sure, but those of us, starting with Bob Booth himself, who remember the glory days of airline regulation and outrageous protectionism, need no elbow-jogging to know the lengths to which monopolies will rise to keep the bacon to themselves.

The tourist industry in Cuzco has improved enormously in just a few years. Orient Express, a decade ago, brought five-star hotelier skill and style to their Monasterio, Cuzco and Mach Picchu Lodge and, using their panache and marketing zap, completely up-heaveled Cuzco. They quickly trained their amiable but one-star personnel to international levels and raised the comfort bar, with breath-taking prices to match. Good for them and today there’s a lively range from $10 to $1,000. No one in Cuzco, pre-OEH, knew even how to spell croissant. Today the Brescia-Libertador group, together with Starwood, are opening, next door to my own adobe riverside, woodland home, a spiffy $52mn Luxury Collection spa, lovely views of river and snow-peaks up-valley from MaPi itself. Marriott is putting up a new Olde Inca tambo in cobbled Cuzco, and there’s half-a-dozen charming luxury-boutique hotels already open. They meld in well with a daily roster of religious processions and up-the-workers down-the-politicians rallies.

There’s suddenly a flurry of snazzy restaurants with names like “Jack’s” and “Chicha” offering Novo Andino guinea-pig aux fines herbes and carpacho de alpaca. And, Dios mio! Starbucks is opening next to the Catedral. Cuzco’s been a 24/7 party since the beat-bearded ’70s so it’s just getting better. Even Barry Walker’s Cross Keys pub, which recalled the gun-slinger saloon in Star Wars, is in new, non-creaky quarters just off the Plaza de Armas with Manchester xxxx-ale and loos that work.

Today LAN is running 14+ flights a day to Cuzco, using A319s, TACA two (A319,A320), Star Peru two, and Cielos de Peru, a start-up, two more. No night flights, thank goodness. I can remember when CUZ, 11,300ft asl, would get one or two DC-3s and DC-4s wing-tipping it between the glaciers below the summits.

One example of the new upper-crust tourism involved the other day none less than Pedro Heilbron, COPA’s CEO, and Matias Campiani, CEO, Pluna, Montevideo, leading a lively bunch of top Young Presidents from all over: I had pleasant chats with South Africans, Greeks, Mumbai Indians, Francaises and most other breeds. Pedro, together with Alberto Beeck, the Peruvian financier, had asked me to tell them in a fireside chat How to Find a Lost City, an interest of mine since my National Geographic days. I told them that the way not to do it, about which I know a lot, is to look for a blank spot on the map and say, Aha! that must be where El Dorado is. I told them about people, including friends, who had come to a sticky end doing this, and that Brad Pitt and Angelina Jolie are about to shoot a movie in Bolivia about Col. Percy Fawcett, the Lost World Brit who disappeared into the Mato Grosso in 1925.

My new computer-controlled hydraulic Parker-Cummins-powered DMU-autowagons, vaguely reminiscent of a San Francisco tram painted with parrots, is called, of course: The Machu Picchu Train –The Lost City Traveller. They have cost me and my partners slightly less than late-model Dreamliners with the advantage, I suppose, that if they run out of gas at least we can push them home.

Letter from Urubamba, July 23, 2010

Heating up the Sierra

By Nicholas Asheshov

I HAVE just discovered that you can grow almost anything on the freezing punas of the high sierra, way above the tree-line.

Here on the roof of the world the midday sun is sharp but desolate. The grass is thin, tough and grey. There are no trees, no bushes even.

But, as I say, you can grow lettuce and cabbages, roses and onions, broccoli and spinach, tomatoes and strawberries. Actually, there’s nothing to stop you growing peaches and pineapples.

The way to do it is, of course, in a greenhouse invernadero. I put “of course” but actually I didn’t know this until the other day when I went to Patakancha, 3,819ms asl, at the head of a majestic little valley that leads up into the glaciers of the Cordillera Urubamba from the cobbled backstreets of the old Inca town of Ollantaytambo.

Until last weekend I thought that it is the height, lack of oxygen, that prevents trees and most other plants from growing at altitude.

Fortunately, an in-house high school student has explained that while lack of oxygen affects animals, insects, whatever, it makes no difference to plants. These need CO2 which they then convert into oxygen.

As long as you have heat and water, soil and fertilizer you can grow anything you like at any height. At Patakancha I’ve just seen this in action. I am sending an urgent e-mail to my chum Ismael Benavides, Minister, of course, of Agriculture, asking him if he, too, has been told about CO2 and oxygen.

A chill early-morning breeze from distant snow peaks sweeps over bleak paths along which wander woolly llamas and thin ponies.

Inside some modest plastic sheeting+adobe greenhouses it is all fat, healthy hortalizas, hot-house fuchsias and medicinal salvia/aloe. They seem to swell in the T-shirt warmth.

This 11x6x2.50m greenhouse, costing $1,200, has changed the eating habits and finances of many families and at the same time my view of the future of the Sierra. I predict –you read it first here in Country Notes– an agricultural land rush in the high sierra of Peru and Bolivia. This will be related partly to global warming and partly to technology, starting with simple plastic-sheeting greenhouses. Solar electronics will add to the curve.

Living at altitudes of 4,000ms and above is nothing new to Peruvians and Bolivians but the tropical Andes are, in this as in many other ways, unique. In the Himalaya no one lives even at 3,000ms because from there on up it’s snow and ice. But Lake Titicaca, at 4,000ms, has been standing-room-only people for four or five thousand years. The Tiahuanaco cultures on the shores of the Lake were producing wonderful art and buildings at the same time as the Greeks, at sea level, were building the Parthenon and sculpting the Venus de Milo.

John Earls, the great Australian academic, tells us that the terraced amphitheatre of Moray, 3,550ms asl, and the whole Urubamba Valley was a great agricultural research station 600 years ago.

At 4,000 meters in the Andes it freezes most nights. Below zeroº C neither plants nor animals survive unprotected.

In the simple Patakancha hot-houses the midday temperatures get to 40ºC, like Calcutta on a bad day. Of course, someone has to open some vents otherwise all you get is broiled carrots. But with water and spray you get a jungle-type hot-house where you could grow orchids and peaches.

The Patakancha greenhouses are part of a revolution.

When I was last in Patakancha eight years ago it was a miserable dump of round stone ichu-thatch huts.

Today the houses are of whitewashed adobe and tile roofs. Many of the houses have CNN/HBO satellite telly and there’s solar-powered phone service. The llamas are no longer feebly ferrying fire-wood but haughtily hauling the North Face camping gear belonging to European tourists.

The greenhouses at Patakancha were put in by local people led by our friend Justo Callañaupa and financed by a Dutch NGO. Justo, un ingeniero agronomo, has over the past six years created a secondary-level agricultural school, centred on the greenhouses, which now has 120 pupils, including 26 girls: “That’s a big priority today; get more girls to join in. It’s happening.”

Ten years ago no one spoke Quechua into a telephone. Today Quechua is chattered into cellphones in Patakancha just like they do in Patterson, N.J.

Notas de Campo – Published in Spanish in Caretas, week of Aug 31 2007

El Dorado (Paititi) The Mysteriously persistent pre-Columbian Utopia

No one has got rich by finding a lost city but there’s a dream hidden there in the mind of all of us.

By Nicholas Asheshov

Clearly, the important thing about lost cities is that they’re lost. Once they’re found, the archaeologists take over, and the tour guides won’t be far behind. Another handful of expeditions is setting off this season, as there will be every year forever. There is more chance of hitting the New York State lottery than of finding El Dorado or Paititi but every expeditionary would rather find The City than win the lottery. To discover the unknown past is as good as, and more believable and possible than, seeing and touching a UFO. Show us the man who can prove that El Dorado and UFOs don’t exist!

Peru has been supplying genuine lost cities not just way back when, like Turkey or China, but this century -Machu Picchu to begin with and more recently Pajaten and Espiritu Pampa in the mid-60s and Gran Vilaya just 10 years ago.

From the 1980s, too, came Sipan, the startling, rich pyramid, which for these purposes qualifies as a city, hidden not behind the Andes in impenetrable jungle as required by lost city lore but out in the open desert not far from the Pan-American Highway. But coastal sites like Sipan are mostly produced by archaeologists, in this case Walter Alva, a dedicated, persistent scientist who thoroughly deserved his success.

But archaeologists are trained to keep their noses to the ground, preferably below ground. Their grasp of the nitty-gritty doesn’t allow them to see the wood for the trees. So they rarely find the genuine Lost Cities out in the bush and actually they hardly even go looking for them. It wouldn’t be scientific. The real thing is invariably searched for and found by people who act like, and sometimes even look like Harrison Ford. They include, in the case of Peru this century, Senator Hiram Bingham, Colonel Percy Fawcett, Gene Savoy and Robert Nichols. A handful of others, including Vincent Lee, Robert Randall and Yoshiharu Sekino have also been prominent in looking hard, scratching the surface of the Amazonian flanks of the Andes.

Bingham and Savoy both survived their adventures and went on to become well-known and established in their own country, the United States. Savoy is alive and well in Reno, Nevada, though he is just about to set out on yet another sea-faring trans-Pacific adventure in a 20 meter mahogany catamaran with two Mochica dragons as prows. That’s the kind of style lost city discoverers like to travel in no cut-rate economy class for them.

Nichols, Fawcett and Randall are dead. Nichols was killed by Indians 25 years ago as he searched for Paititi, a fate suffered by Col. Fawcett half a century earlier. Randall, based for years in Ollantaytambo, died five years ago after being bitten by a dog.

40 kms from Cuzco, in Pusharo, in the jungles of Madre de Dios, there were found petroglyphs covering 14 meters of a massive rock wall, apparently part of a religious complex, thought by some to indicate the existence of a lost city with the characteristics of Paititi.

Up-and-comers include Vincent Lee, a Wyoming architect, who is apparently about to produce a book on Vilcabamba. I myself spent part of my early years in Peru looking either for lost cities or for people who had got lost looking for one it’s basically the same thing and I own a hotel in the Sacred Valley which is riddled with ancient cities and an integral part, for sure, of the greatest lost city territory left on Earth.

Savoy, now in his sixties, has always look more like Buffalo Bill than Harrison Ford, but he has the same outlook. Why is he going to sea rather than looking for lost cities? “Living among the gamblers in Reno, you learn to quit when you’re ahead.” Savoy says today. “I was getting like an old gunfighter. It was too easy. That’s dangerous.”

Savoy also helps to explain why it is explorers and not archaeologists who find the lost cities. “Getting into archaeology would have stopped me dead.” he says. “Digging into a pit, messing around with carbon 14 and the other bits and pieces. History, not archaeology, is the key.” Listen carefully, explorers. Savoy is the only man alive who has won the lost city lottery. Three big, big ones, and a score of lesser, excellent finds. At that level we are talking not of gamblers, but of the fellow who owns the casino.

Two on my list set off to find El Dorado but never returned. The first was Colonel Fawcett, an eccentric English army officer, a qualified surveyor who among other things fixed a big part of the Bolivia-Peru frontier, and did it so well that it has never been disputed.

Colonel Fawcett was doing this at the same time, 1910-11, as Bingham was marching down the Sacred Valley finding Machu Picchu and Rosaspata. Inspired by Bingham’s success, he returned from England in the mid-1920s at the head of an expedition but this time heading, via Rio de Janeiro, for the north-western corner of the Mato Grosso, near the Bolivian frontier.

I can’t recall what the logic of his search was, though it was certainly based on stories from locals and Indians he had encountered on his previous travels and surveying. But he disappeared forever and set off a whole school of lost city excitement in England for two or three generations of adventurers who would set off to find both Col. Fawcett and the Lost City that he had presumably found and where he and his son Jack were being held captive in incredible luxury. (Another son, Brian Fawcett, lived for years in Peru and was the foremost authority on steam trains in the Andes).

In fact Percy Fawcett was killed by Indians in 1925, as proved more or less conclusively by the Villas-Boas brothers, the Brazilian Indian specialists, in the 1950s.

The same fate was suffered by my friend Bob Nichols, a tough, unassuming traveler from Oregon. Bob was in his thirties during the 1960s when he spend several years in the Convencion valley, below Cuzco and then in the Alto Madre de Dios jungles at the bottom of the Q’ospipata valley. It’s a tough place today even though a few tourists pass by in powered canoes but it was a really tough place in those days.

Bob was an unusually fine writer and got a job with me as a reporter on the Peruvian Times. After a year he told me he wanted to go and find Paititi. His time down in the Madre de Dios had provided him with the inside story, the clues from the indians, whatever. For Bob this last piece of the legend turned out to be unbelievably, tragically true. He, two French friends and half a dozen Mashco Indians set off up the Rio Palatoa from the Dominican mission at Shintuya. They passed the Shinkikibeni petroglyphs. The guides returned, having refused to go on, Bob and the two Frenchmen pressed on. They never reappeared. Many left for El Dorado and never returned.

One doesn’t ask questions. Among lost city fans Paititi is the name for a kind of Inca or pre-Inca lost city-state which, in most versions, is still functioning. It is, at least, zealously guarded by impenetrable jungle and impassable ravines as well as by 20-ft bushmasters (shushupes), jaguars and, of course, deadly Indian-guardians.

This was 1970. I spent six months  looking with no success and no further indication of a Paititi. But two years later a quiet young Japanese law student went in alone and with splendid persistence and courage found, photographed and chatted with three Machiguenga Indians who told him how they had killed the three explorers. They gave him enough bits of paper and other objects to show, beyond doubt, that their story was to be believed.

Yoshiharu went back more than once, armed with satellite photographs which showed for this area a series of “dots” apparently in some triangulate alignment. He found nothing but went on to other parts of Peru and produced a super collection of photographs of Peru’s jungle and mountain peoples. Dr. Carlos Neuenschwander, an Arequipa physician, subsequently persuaded the air force to fly into this area, the Pantiacolla range of hills, with a helicopter but found nothing. “Everybody always wants them but you never find anything with helicopters,” says Renato Marin, a Cosquero naturalist and explorer who knows this part of the world better than anyone else. Mr. Marin thinks that there’s a good chance of finding a genuine big city up in the hills behind his former hacienda, Amaybamba, in La Convencion, just downriver form Machu Picchu itself.

Two main areas of the mountains and the jungle in Peru are the most consistent producers of ancient cities and fortresses.

The classic area is to the north of Cuzco anywhere in an arc from Ausangate to the south and east around through Quincemil and across to the Alto Madre de Dios and Alto Manu and then up towards Atalaya, then back up the western flank of the Apurimac basin towards Ayacucho. Actually, I’d include most of the area north of a line between Cuzco and the northern shores of Lake Titicaca, including the Bolivian frontier region.

I’d say that half the world’s lost city people will continue, in my view rightly, to comb this often difficult, outstandingly beautiful, powerfully evocative area with its fine track record. This place smells of lost cities and, why not? lost tribes. Inca roads dive off the highlands into impenetrable jungle and other essentials, including risky, difficult-to-locate Indian groups. Two or three of these have been found within helicopter distance of Cuzco in the past three or four decades. They’ve even attacked oil exploration parties (they didn’t get ’em).

The other area is in the North, around Chachapoyas and the great fortress at Kuelap. It’s in this region that Gene Savoy found Gran Pajaten and, later, Vilaya. Savoy also found dozens of other remarkable sites in this area. It was Savoy, too, who located and correctly identified Espiritu Pampa, in the Vilcabamba as the last refuge of Manco Capac and Tupac Amaru.

If you think that you will be popular and meet interesting people once you have found a lost city you may be in for a surprise. You might think that your efforts, which undoubtedly provide work for needy archaeologists, would make you respected by them. Not at all. They dislike Savoy intensely and they hated Bingham, the finder of Machu Picchu, Rosaspata and a handful of other world-class ancient remains. Both of them were accused formally of being grave-robbers and huaqueros (people who illegally dig up artifacts and sell them at Sothebys). I myself had to dig Savoy, at that time a reporter for the Peruvian Times, out of clink in Lima on one occasion a quarter of a century ago.

This is pure jealously on the part of archaeologists and locals who didn’t have the persistence and perception to get there and stand up and say “I found it!”. Neither Bingham nor Savoy claimed any special academic knowledge. What both of them did was to do a lot of homework, reading the chronicles carefully. They also listened carefully to their guides and travel companions.

“Do your research, period,” Savoy says. “History is the key. If someone was there and left a record, find it. Also, local people know. Ask, and listen to their answers.”

What Savoy is saying sounds obvious but actually almost no one follows this advice. This is a mistake not made by another branch of lost citying, looking for lost treasure galleons. The winners there comb the records religiously before setting out.

This is not at all the style for most lost city searchers. What they all do, I did it myself, is to look at the map and say to themselves and their chums. “This looks like a likely spot. There are no roads, the approaches are dreadful, my friend X’s father’s peon said there is an Inca road that goes straight off that away and he found a golden amulet. Also, it’s not been properly mapped.” (This statement applies to almost all of the area north of Cuzco and the Sacred Valley).

A few travelers tales from missionaries easily the most unreliable sources and farmers and hunters rounds out the picture and before long we’re out shopping for Brazilian snake-bite serum, asking how much helicopters cost (too much) and ordering zip-lock plastic bags from Miami.

Lost cities and fortresses not found on maps remain invisible to air photography

The main basis for thinking that Paititi is off the map is because the Incas are supposed to have thought that the Spaniards were after their last gold hoard and that they ran off with this into the jungle.

Victor Angles, an amiable Cuzco historian who has written extensively on Incas and their ilk, says that this is hogwash. “The Incas thought the Spaniards were gods and handed over ever bit of gold to them. There’s nothing left. There’s no Paititi.”

There may be historical logic to Mr. Angles’s thinking. But it’s not going to cut much ice with the lost city crowd.

He himself puts a big “But…” into his own thesis after he describes how the Count of Castelar sent the King of Spain documents, which indicated that the ‘Empire of Paititi’ was at the confluence of the Beni and Mamore Rivers more or less where Percy Fawcett was heading.

Mr. Angles continues, “When more complete ethnological studies are carried out on the native tribes in Peru’s southern jungles, we’ll have more light shed on Paititi.”

Those are our marching orders. We must shake the moths out of our mosquito nets!

If you though Terra Incognita was only on ye olde maps, take a look at the latest satellite-based charts produced by the Department of Defense (DoD), Washington and the excellent Instituto Geografico Militar, Lima. The DoD (the Pentagon) are the people who can put an Intercontinental Ballistic Missile into the kitchen in the Kremlin, but they haven’t got round to backland Peru. Big slabs of maps within a day’s march of Machu Picchu are blank, with the lame excuse “Not Covered by Aero photographs.” And this is the satellite age.

Lost city people, take note and take heart. The DoD people, lost city men for sure, are keeping something back.

Here Comes the Window Tax

By Nicholas Asheshov

I have a suggestion for Mr. Castilla, the young finance minister, which will help him iron out what he calls disruptions in the economic agenda. It happens to us all.
My idea is that he create a new tax which will have the merit of aggravating, but not much, the better-off, and pleasing socialists, making it an out-of-the-gate winner.
My proposal is for a tax on windows. If, like some of my neighbours here in Urubamba, your house has just a few small ones or, high in the Cordillera, no windows at all, you pay nothing. If your house in the jungle is all palm-thatch roof, it’s the same. No tax.
For Peru today, the window tax is “Brilliant!” says Richard Webb, the country’s top economist.
“A window tax would be a thousand times easier to collect than the present property tax. No complex calculations.”
Every householder will simply fill in a form on their iPad stating the number of windows in their houses and apartments and make a bank transfer accordingly.
The tax people will of course make spot checks and anyone whose math is found faulty will pay a suitable fine.
This proposal, which I am sure will be taken up immediately by the literate members of the Congress, came to me from Mansfield Park, one of Jane Austen’s six wonderful novels of country life in England two centuries ago: Jane started to write Mansfield Park in 1812 and it was published in London two years later. They did not even put her name on the cover, just “By the author of Pride & Prejudice and of Sense & Sensibility.”
Jane’s reference to the window tax comes as she is describing the visit of a family to the immense country palazzo of a neighbour where there were so many rooms that their only function, she suggests in her sharp-tongued way, is that they are there to pay the window tax.
All English people, like myself, are familiar not only with Jane’s stories but also with the window tax of the 18th and 19th centuries, partly because its results can still be seen in old towns and old houses out in the country. Some of these still have large window-spaces blocked in with bricks in order to reduce the owner’s tax liability.
My 1911 Encyclopedia Britannica tells us that the tax was widely disliked as an attack on “light and air” but was acknowledged to be progressive, meaning that it hit the rich but not the poor.
If your house had more than eight windows you had to pay double the rate, to whit, four shillings per window instead of just two shillings.
No Pane, No Gain
H.M. Treasury’s website calculation of what two shillings would be in today’s sad sterling is just over GBP11. That’s $17 per small-house window, call it S/.50, or S/.100 per window for a house or apartment with more than eight windows.
Let’s say there are five million urban houses in Peru with six windows apiece, the window tax would bring in $500mn at practically zero cost in collecting.
There would have to be some clear definitions. For instance, my own house here in Urubamba has 14 windows, plus six in the playroom and guest suite on the other side of the garden. But two of them on the verandah are absolutely immense, making up a full 20 yards long looking onto the river, the woodland and the snow peaks of the Cordillera Urubamba. If I had to pay, say S/.300 a year just for those, I’d think, at S/.1 per day not including Sundays, that I was getting a good deal, cheap at the price.
I also have some glass-and-wood French windows, which I would maintain are really doors but I bet the tax people would say “Windows!”
The tax, the encyclopedia says, was also levied in parts of France and Germany. In England it was ended in 1851, maybe because in those days it was not so easy for the Inland Revenue to collect from crusty landowners with bulldogs and shotguns.
“The window tax,” Richard Webb says, “will open the door, ha ha, to the more equitable and more aggressive tax system that Peru urgently needs.”
Minister Castilla can give his new window tax a literary tong by calling it “the Jane tax.”

Richard, Director of the country’s leading think tank, the Instituto de Peru, at the Universidad San Martin de Porras, adds the stunning calculation that the value of urban real estate in Peru has in the past decade increased five-fold. His comments:
Urban property is undoubtedly the biggest, least taxed, yet easiest to tax, and most justifiably taxable form of wealth in Peru. Justifiably because there is zero disincentive on productive activity, and because it is highly progressive and by any standards democratic.
Here’s a back-of-the-envelope calculation. Let’s say there are three categories of urban – district capitals, medium cities, and Lima.
For the districts we have a figure for the last 10 years, using my telephone survey of 200 of the smallest and poorest district capitals. If the average size of those homes is 100 square meters, the square meter has risen in value from US$11 to US$43 between 2001 and 2010.
For medium towns we can guess that the square meter value is about double the distrito value, therefore rising from US$22 to US$86.
For Lima, a house in the grass-roots Huascar area, in San Juan de Lurigancho, today sells for about US$200/m2, up from US$51 10 years ago.
Excluding rural homes, the urban population is roughly 30% Lima, 20% medium cities, 20% distritos.
So, multiplying the values by the homes (average family is 4.5 persons and two-thirds live in owner-occupied homes), we estimate that total home value has risen from US$8 billion to US$38 billion between 2001 and 2010. Back in 1960, it could not have been much more than US$1 billion.
If the window tax is the equivalent of an annual 1.2% tax on house value, I arrive at almost exactly your estimate of US$500 million annual revenue. And all on wealth that no one produced: it is pure rent generated by the fact that it is more practical, productive and socially pleasant to live nearer other people than scattered all over the mountainside.
I also asked Richard, about the values of agricultural land, nothing to do with windows.
“I thought you’d never ask,” he said. “Our survey included a question on “el precio de una hectarea agricola en su distrito.” I’ll check, but off the top of my head the preliminary figures, when the survey had reached 100 districts, changed only slightly when we extended it to 200.
“The figures are: average price per hectare in 2001 – 6,847 soles, in 2006 – 9,425 soles, in 2011 – 15,578 soles. All this in constant 2011 prices. That’s 8.6% growth in value per year over the decade. Over the last five years it is 10.6% growth p.a.”

Published in Spanish in Caretas, week of February 10 2012

Polling Day

By Nicholas Asheshov

With polling day on October 3 the campaigns for regional and municipal elections are heating up and this is not just a spectator sport in Peru. Hundreds of people in every district, thousands in every province are running for office and to judge by Urubamba, Cuzco and Lima, which I follow with attention, the democracy-count runs the gamut from vicious to ferocious.

Half-a-dozen candidates have been murdered, one would-be alcalde in the backwoods of Huanuco is in jail for organizing a who-can-drink-most competition with wood-alcohol at which the three winners died, and the alcaldesa of Santa Anita, a Lima district which includes a main foodstuffs wholesale market, escaped when her car was fire-bombed.

There are even aviation connections. In Lima the front-runners are Lourdes Flores, on my Right, and Alex Kourie, in the misty Middle. Lourdes, a 50-something lawyer, has run for President of the Republic two or three times and had always seemed to me to be jolly, too talkative but nice. Few, including me, now think this because the TV and newspapers have forced her to own up to working for years for a fellow called Cataño whose name is really something else but he changed after being nabbed years ago with 100 kilos of cocaine. Lourdes has for some time been Chairman of Peruvian Airlines, owned by Mr. Cataño, at $10,000 a month plus exes.

Lourdes also does not chat freely about another client and friend, Jose Luis Sanchez, the Spanish spinner who collected $3mn from Fujimori’s master-fixer Vladimiro Montesinos, now doing life in a Callao prison, during the 2000 general elections. Sanchez was in charge of the dirty tricks section.

Lourdes has also been legal advisor to the people, many of them from Pakistan, who import tens of thousands of second-hand cars, trucks and buses from SE Asia to come and gasp their last smoky, fumy breath on Lima’s clogged streets. Many of them, to add injury to insult, started off as right-hand drives from Japan, Hong Kong and the conversion to left-handers is often poorly done meaning dreadful crashes and buses going over Andean precipices. It’s all illegal, but Lourdes has shown the importers how to get local magistrates to slap amparos, laissez-passez orders thus circumventing the laws. Mr. Cataño, though not from Pakistan, is also a leading importer of pre-owned vehicles and the drugs police are pressing him for details on his finances.

Alex Kourie, mayor of Callao, has had problems with a tiny one-mile section of the only road to Lima’s Jorge Chavez International Airport where he was charging a $1 toll; for years it was easily the most profitable venture in town, making infinitely better margins than LAN, COPA and TACA combined.

An unfancied outsider, Susana Villaran, has come up fast on the loopy Left. Susana, one of those expensively-brought-up caviar socialists, as they’re known in Lima, has a collection of convicted terrorists on her aldermanic lists and spat furiously at my friend Pedro Pablo Kuczynski, the banker and former PM, when he mildly commented that foreign investors were “keeping an eye on”–some such– her swift rise in the polls.

The present mayor of Lima, Luis Castañeda, a close associate of Lourdes, is running for President in next year’s elections, but has been dogged by connections with a $20mn scam involving garbage collection and some Brazilians.

For us in the provinces this is all entry-level shenanigans. At the moment the mayor of Cuzco is the third since the elections four years ago. The first two achieved the impossible by getting caught with their fingers in the cookie jar. The way that crooked alcaldes actually get caught, though rarely, is what is politely known as nepotism; no one can resist having their cousins, children, domestic servants and mum and dad on the payroll. Actually, none of the voters objects -they’d do the same; noblesse oblige. But they only get accused of it when there are more serious matters that can’t so easily be proven.

Here in Urubamba we keep up with the metro crowd. Our alcalde, Benizio Rios, one of the vaguely-lefty NGO people who infest Peruvian and Bolivian provincial life, has just been booted out of the town hall for nepotism. Items like sewage infecting the municipal playground, gross potholes in the streets are not criminal offences. But you’ll be glad to hear that because of a judicial technicality, which may have nothing to do with Benizio being friendly with the appropriate magistrates, he is running for our alcaldia again. His slogan is “Honradez y Experiencia.”

Benizio has the backing of the well-heeled Hugo Chavez —come in, Caracas--party, whose symbol is a simple “O” for Ollanta Humala, an ex-army commandante and wanna-be Chavez whose wife has problems explaining where all her money comes from. On top of that Benizio has the support of the Machu Picchu bus drivers, to whom he awarded a 30-year monopoly, worth $10mn+ a year for 20 creaky buses between the train station and the ruins. This is totally, believe me, illegal but Machu Picchu is a no-rules zone, off-limits even for SUNAT, Peru’s tough IRS.

There are 13 candidates for Urubamba mayor and it’s not only Caracas and the bus people but the government budget that makes it worthwhile. Eduardo Guevara, a three-time mayor here, and a good friend, tells me that in his day it was a million or two. Now it’s $20mn. Eduardo, who’s running again, was round for a coffee the other day together with a candidate for mayor of one of our districts, a Catholic priest, an excellent young chap who we’ll call Arturo. As we were talking, I found that a lady had come in and was physically attacking Padre Arturo, spitting, hitting, swearing. It was a comadre of mine, a schoolteacher and it turned out that Arturo was the father of her one-year-old baby, a frequent visitor but we’d never been told and, of course, never asked about daddy. But there I was, like one of those referees in a wrestling match on the telly, trying to separate the contenders. Naturally, my comadre’s family is running one of her many brothers, also a good egg, for the alcaldia of the district against Padre Arturo. Try as one may it’s not easy to stay out of local politics and now you see what I mean about it being not just a spectator sport.

Letter from Urubamba, Sept 30, 2010

Traditional Candles

By Nicholas Asheshov

In a backyard patio in Tica Tica, a barrio high above old Cuzco, a cauldron was bubbling over a wood fire.

“It has to be 200, 220 degrees,” Mario Calderon tells me. “If you let it get any hotter the colours will spoil, go muddy.”

The cauldron contains 50 kilos of paraffin wax from China and Argentina and Mr. Calderon, a master candle-maker, will use this batch to make dozens of elaborately worked bright red candles of different sizes most of which will be used in churches for fiestas and saints days, or by people like me who like candles.

Candle-buyers preparing for the Virgen de Asunta for mid-August were crowding the Calderon’s shop in Calle Meloq down near the Plaza de Armas. Mr. Calderon’s wife, Gavina Ninantay, says: “Our year really gets going on May 3 with the Fiesta de la Cruz. That’s our big day of the year.”

Of course, there are dozens more saints days to attend to.

The candles produced by the Calderons are brightly coloured and elaborately decorated in blue, yellow, bone, black, green, brown and reds—with endless carved baroque vine-like curls on which are stamped silver and gold flowers recalling, one supposes, the days of the Colony.

The biggest candles here run to 1m 80, a head taller than most of the clients, and six inches in diameter, a pair of which, elaborately decorated as always, run to S/400. Foot-high candles, three inches thick with three kilos of wax go for S/50 the pair with all sorts of sizes and colours in between.

Ms. Ninantay, a bustling hard-sell grand-mother, tells me that clients take cases of her candles to Germany, Argentina, the U.S., “a todos partes. Los Chilenos son bien pagaditos.” Saga Falabela in Lima send her designs and substantial orders, she adds.

“Easily the best wax comes from Argentina,” Ms. Ninantay says. The China wax is “rough and flakey” by comparison but the Calderons use it because it’s cheaper, at S/.8,000 the ton. The Argentine is S/11,000/ton.

“Con pura China al momento de decorar se revienta.”

“The worst is the Española y Turquesa. Parece grasa, desaparece rapidito.”

She also brings in from Lima the coloured die powder, made by Bayer in Germany, and liquids, also from Bayer, with different aromas. Mr. Calderon says, “We use canela, rosas, vainilla, clavo de olor, chocolate”. Sounds lovely, but Ms. Ninantay says, “Putting in the aromas gives us both a headache.”

Another important element is the wick.

“Some are too fast and sputter,” Mr. Calderon says. He puts arida on the rolls of thick thread as well as acido boricopara purificarlo de lo plastificado porque ya pues no es puro algodon.”

Experimentamos para que nuestra vela arda bien.”

Most of the Calderons’ candles come from home-made molds cut from PVC tubes of different thickness bought in the hardware store. Some of them were originally tin cans of Cil cooking oil.

One end of the tube is blocked with a round piece of tin cut to size, with a small hole in the middle for the wick. The liquid wax is poured into the top end of the mold.

“If you put the wax in too hot it melts the PVC and twists it,” Mr. Calderon says. “So you have to wait till it cools to 150′.”

Then it takes six or seven hours to cool: “You can’t do it in the fridge, se raja. Cuando trabajamos en esto, cerramos las puertas.

Seria mas facil para mi comprarme unos congeladoras, but once we did it for a rush job but they came out pesimo, perdimos todo. In the fridge the outside of the candle gets cold faster than the core.”

The decoration takes two hours for each candle. I watched three lads in one of the rooms of the rambling house sitting on low stools with an iron bowl of hot wood coals on a low tripod. Each had a thick candle hefted in his left hand which he held over the brazier to keep the candle soft enough to carve, with different size sticks like pinceles, the intricate vines and flowers into it. They would quickly dip a small wooden flower stamp into silver or gold-coloured powder to produce an amiably busy shining effect.

Each of the lads, one of them one of the Calderon children, would be off to technical school later in the afternoon.

Se trabaja a base de tradicion y habilidad,” says Mr. Calderon, whose father was a candle-maker. “There’s no how-to-do-it handbook.”

Published in Spanish in Caretas the week of August 14, 2009