Meeting Roberto Dañino it’s natural to ask why a Washington-based lawyer on a $140,000-a-month pay package would give it up to become prime minister of Peru, a $14,000-a-month job with ‘headache’ written all over it.
Typical of Dañino, a business veteran who plainly relishes a challenge, he shrugs off the question with a smile. “Coming from a six-acre mansion [in a wealthy suburb of Washington] to live in a 200-meter apartment in Lima is a little bit of a shock,” he says. “For my children it has been a sacrifice. For me it is the privilege of a million lifetimes.”
When the call came from Peruvian President Alejandro Toledo two months ago inviting Dañino (‘Bobby’ to his friends) to be the lynchpin of his new government, the 50-year-old lawyer accepted without hesitation. Within 72 hours of the call, he left his international law firm, Wilmer, Cutler&Pickering, put the mansion up for sale and was on a plane to Lima. His wife and four sons joined him a week later.
Dañino recalls breaking the news to his family: “I said, ‘Guys guess what? Dad is going to be prime minister of Peru.’ I don’t know if they have realized it yet.”
A Taste for Politics
Roberto Dañino
Like his close ally, Economy Minister Pedro-Pablo Kuczynski, Dañino has a taste for Peruvian politics. At the age of 29, he served as general secretary at the Economy Ministry. Later he actively supported Peruvian novelist Mario Vargas Llosa in his failed election campaign in 1990 and former UN secretary-general Javier Pérez de Cuéllar during his unsuccessful bid in 1995. And as with Kuczynski, Dañino brings US corporate savvy to an administration eager to raise foreign capital.
Dañino is regarded by many in Washington as a top international finance lawyer and his firm reputedly has one of the best Latin American client lists in the United States. Dañino was behind some key private-sector deals in Peru during the 1990s, advising on the first international bond issue for Banco Wiese and in the sale of Compañía Nacional de Cervezas (CNC) to Peru’s Backus. His wife Pauline has also maintained links with her homeland by supporting charities, one of them based in Toledo’s childhood hometown.
Toledo took power in July, a year after Alberto Fujimori defeated him in flawed elections. Fujimori’s 10-year grip on power ended last November amid accusations of corruption that have followed the ousted leader to Japan, where he now lives. Peru has charged him with being behind two massacres in the early 1990s.
Demonized by Fujimori and some foreign investors last year as a rabble-rouser, Toledo needed to bolster his image. He chose Dañino – they have known each other for three decades and share a passionate belief in democracy – for his US financial contacts and as a duo with Kuczynski to reassure investors that fiscal prudence and free market orthodoxy would prevail over populism he had fanned in the campaign. “We have the willingness of many institutions to provide long-term lending to us – money that was withheld in the latter days of the autocratic Fujimori regime,” says Dañino.
He and Toledo forged a friendship in the mid-1980s when Dañino was working at Peru’s External Debt Commission and the future president was an employment advisor to then-President Alan García. In 1990, the two men collaborated on a book ‘Peru and Latin America – How to Finance Growth.’ It was Dañino who opened doors for Toledo in the United States before the first-round election battle against Fujimori last year. In June this year he accompanied Toledo during his post-victory US tour.
Draw for Investors
Dañino’s long career in the public and private sectors, and experience with multilateral organizations should prove a draw for investors. He proved his mettle as a fixer when the Inter-American Development Bank hired him as a consultant in 1989 to create the Inter-American Investment Corporation, an institution set up to channel private investment from developed countries into small Latin American businesses. But investors still need to see him calling the shots in the Toledo administration.
Fujimori’s autocratic style meant his prime minister was often little more than a figurehead. But Toledo says he has “full confidence” in Dañino Superficially at least, the two men come from different sides of the tracks. Dañino was raised in a wealthy district of Lima and has law degrees from Peru’s Catholic University and Harvard. Toledo grew up as one of 16 children born to Indian parents in northern Peru. Although he won a scholarship to study economics in the US, went to Stanford before working at the World Bank and the United Nations, he likes to highlight his humble beginnings. To his elitist critics, however, he remains an upwardly mobile ‘Cholo’ (an Indian of mixed race).
But Dañino says Toledo’s grassroots appeal is a great lever for the government as it tries to win approval for plans to revamp Peru’s stuttering $54 billion economy by stimulating demand through planned tax cuts, restructuring foreign debt payments, attracting private investment through further privatization as well as boosting Peru’s exports, particularly to the US, by lobbying for a lowering of trade tariffs.
Toledo has promised Peruvians ‘market economics with a human face.’ To analysts, it seems Dañino will act as a counter-balance to the leftist and at times hotheaded Toledo. But Dañino dismissed any suggestion that his center-right beliefs would clash with the president’s. “I have a single mandate … to collaborate with [Toledo] in the all-out fight on poverty. That’s why I’ve come.” Failed presidential candidate Lourdes Flores was less diplomatic about Dañino’s role when she heard of his appointment. “[Dañino] should be able to correct the verbal excesses of the president,” she said.
Borrowed Credibility?
Opponents have attacked Dañino’s appointment as a ploy to give the new government a borrowed credibility before he moves on to his next lucrative assignment – an accusation Dañino denies, saying he would fulfill his obligation for as long as the country needed him. With his fluent English and easy manner, working class Peruvians view him as an outsider. Satirists even note that in Spanish Dañino means “harmful.”
As a rich lawyer who has lived abroad for the last 12 years, critics also say he is out of touch with the 13 million Peruvians who survive on $2 or less a day with many lacking clean water, electricity or medical care. A million people suffer from malnutrition. While he is an asset for luring investment and is untainted by the Fujimori era, Dañino, they say, has little feel for the snake pit of Peruvian politics.
But Dañino himself is unruffled by the brickbats. He attributes recent backing for the government’s economic recovery proposals to “the conviction that Peru has touched bottom and if this is not handled properly we will go back to chaos.”
Whatever the criticism, few can deny that Dañino boasts an enviable résumé. He has occupied senior positions in the Peruvian government in the early 1980s, including secretary general of the Ministry of Economy, president of the Foreign Investment and Technology Agency and chairman of Peru’s Foreign Public Debt Commission. He also sits on the board of some 10 international companies as a legal representative.
As chairman of an Inter-American Development Bank’s external review group for private sector activities, he has connections with the multilateral lenders Toledo is courting to help him bankroll Peru’s weakened economy. At Wilmer, Cutler&Pickering, he led the Latin American section, specializing in direct investment, project finance and capital market transactions for private, public and multilateral clients.
Negotiating skills acquired as a senior law partner proved vital for wooing opposition leaders in August and easing the government’s short-term economic recovery measures through Congress. Even critics say he knows how to get opponents where he wants them.
Meager Resources
Delivering the blunt message to trade unions and Cabinet ministers that Peru’s meager resources will not meet everyone’s demands has further tested his diplomacy skills. “Even with my ministers I have to say: ‘Be aware of the scarcity of funds that we have,’” he says. “They still come back and ask for two when we have one.” Beyond his professional record, Dañino says he has something more to offer: “My competitive advantage is the ability to bring everyone to the table. The prime minister is a guy who builds consensus inside and outside government.” Dañino says he is ready to listen to all sections of the country, still traumatized by last year’s political upheavals.
“This is a country whose institutions have been destroyed – whose ethical fiber has suffered tremendously,” he says. “[Fujimori] has created an impression, especially among young people, that politicians are profoundly corrupt.”
Restoring faith in the democratic process by decentralizing power and restructuring government to create a state “at the service of the people” is one of the main challenges facing Peru in the next five years, Dañino believes.
Despite deep-rooted cynicism, many Peruvians still expect the government to rapidly change things – creating jobs, increasing pay for public-sector workers and building new hospitals, schools and homes for the poor. Failure by the Toledo administration to live up to public expectations could bring strikes, demonstrations and increasing resistance from Congress.
To finance its social programs without busting the 2.2% budget deficit limit agreed with the International Monetary Fund for 2001 (provisionally 1.7% in 2002), Dañino says the government must boost growth by encouraging exports, improving tax collection and selling off Peru’s utility companies, highway projects and mining concessions.
Privatization proceeds should bring in about $1.3 billion in the next 12 months. If privatization projects in the pipeline are executed, Dañino believes direct foreign investment in Peru could reach as much as $22 billion between 2002 and 2006 – including a possible expansion of the Camisea gas field. However the planned sale of the high-profile water utility Sedapal, which controls Lima’s water supply, will spark opposition from those who believe such an important state asset should not be sold.
To meet the country’s financing needs for the rest of the year, Peru plans to issue another $200 million of domestic bonds by the end of 2001. Dañino sees scope for an international bond issue later this year, probably in the ammount of around $500 million. “A lot depends on the perception of South America as a whole,” Dañino says. “But we have a little competitive advantage because we are perceived as a country that is coming back.”
Dañino calls Peru “one of the bright spots in the region,” having returned to democracy after Congress ousted Fujimori as morally unfit. But the road ahead is not easy. Aside from the prospect of a global slowdown in the wake of the US terrorist attacks, drug trafficking continues in the jungle, while the Shining Path guerilla movement lingers on in the Andes.
But Dañino refuses to be pessimistic. “You have to have dreams, something that Peru lost a long time ago. For most people, long term means the next 48 hours.”
He plans to hold a meeting soon with leaders from all sections of society to draw up a masterplan for the next three decades. “For Peru to reach the required per capita income to become a developed country it will need to grow 7% per year in the next 30 years,” he says. “That is mighty ambitious. But if we have a vision it means we don’t have to fight over basic issues like education and decentralization.”
With GDP growth expected to be barely above zero this year and only 2.5% to 3% next year, the task ahead looks Herculean. But if Dañino lasts the course and Peru still fails – it’s fair to say it won’t be for lack of trying on his part.