Because of Peru's considerable natural deposits, German interest in that country is steadily growing. As the world's most important producer of silver, the third largest producer of copper and zinc as well as the sixth largest of gold, this Andean nation has a considerable significance for the global metal market. According to information provided by the German Office for Foreign Trade (bfai), the metal molybdenum is becoming one of Peru's most important mining products for export. Molybdenum is a relatively rare component for the production of airplanes and rocket parts. The Peruvian deposits are considered to be the most significant.[1] In 2006, mining products accounted for 61.7 percent of the total value of all Peruvian exports. And the boom is continuing. The mining industry is achieving high growth rates (peak values: 53.3 percent in September 2006) with an even higher increase in the turnover of single metals: Peruvian companies sold 70 percent more silver, 114 percent more copper and 122 percent more zinc than previously.[2]
Insufficient
Until now, the German economy "could but insufficiently benefit from the Peruvian economic upswing" deplores the state-controlled bfai.[3] Last year with exports to Peru valued at 506 million US dollars, Germany, the export champion of the world - despite high economic growth (26 per cent) - found itself far back in the race, lagging far behind the main competitors USA (2.5 billion) and China (1.6 billion). German business associations are supporting the sprint to catch up. The German ministry of economics is subsidizing a business trip to Peru, scheduled for next week, at which German company representatives will have a close look at several mines. In October, the Hamburg-Latin America Association will organize this year's Latin America day -focussing on Peru. Several ministers from Lima are scheduled to attend. According to mining experts, this Andean state is at present "one of the most popular countries for mining investments".[4] Investments valued at seven billion US dollars are expected to be made within the next five years. German companies are demanding their share.
Main Suppliers
Furthermore Peru has considerable significance as a raw material supplier for the German industry. Exemplary data published September 5 by the Federal Statistical Office confirm this. According to these data, a total of 1.1 million tons of copper ore and concentrates were imported into Germany in 2006 to meet the growing demand of German companies. This is a 60 percent increase since 2000.[5] "Germany's main suppliers of copper ore are located in South America" notes the Federal Bureau of Statistics. Berlin is worried that a further increase of German Latin American imports will no longer solely collide with the growing demands of the United States, but now also with sales agreements made with the People's Republic of China. For example, Beijing has secured for itself more than half of the copper extracted from Chile's largest underground mine. Until now, Chile is, by far, Germany's main copper supplier. Peru is currently in third place - with increasing volumes.
Clear Disadvantages
But Berlin is threatening to lose ground. Peru's Minister of Foreign Trade, Mercedes Aráoz, recently announced negotiations with China on a bilateral free trade agreement, due to start at the beginning of 2008 and to be concluded at the end of next year.[6] Already last year, Lima and Washington agreed on a wide ranging reduction of customs tariffs in their bilateral trade. Chambers of commerce and umbrella organizations of German industry are warning that "besides some improvements" the treaty with the United States would mean "clear competitive disadvantages for European companies."[7] Already at the beginning of the German EU Council presidency, they had been calling on Berlin to stand up to the North American and Chinese rivals and reach an agreement between the EU and the so-called Andean Community of Nations [8] - which includes Peru.[9] Previous attempts to conclude free trade agreements with Latin American states, have so far, almost without exception, failed due to Brussels' demands issued as an ultimatum.
Conflicts
New free trade agreements and the amplification of the extraction of raw materials could also intensify social tensions in Peru. Already last year's treaty with the United States triggered wide protest. It finally had to be approved in a blitz operation, just before the constitution of the newly elected parliament, in which the opponents of the free trade agreement comprise the largest group.[10] Just recently, strikes, protesting the so-called liberalization measures of the Peruvian government were organized in all industries. Because of social and ecological consequences (resettlements), mining projects are also encountering resistance. At the beginning of the year, the Federal Agency for Foreign Trade had already warned that a number of projects would be encumbered by "conflicts with the population", "which, so far, the central government had been unable to solve."[11] German party foundations do not exclude the reinvigoration of rebellious structures, which, in the past, had already started a civil war against the state authority.[12]
Canasta Alemana
In spite of this conflict situation, the German embassy in Lima initiated, in the summer of 2006, an association of German enterprises ("Canasta Alemana", "German Basket"), "ranging from BASF on up to VW, who organize, together with the German embassy and the chamber of commerce abroad, trips to the mines."[13] As the Latin American press announced, next year the German Chancellor is going to personally intervene in the disputes. Thus, Angela Merkel is planning a visit to Peru in Mai 2008.[14]
