Privatization at What Cost

The other day our group visited the Port of Callao. Founded in 1537, this port is the largest in Lima and among the largest along the western American coast. Before continuing I must note the dramatic advancements in the port since my visit last year. This port is broken into two sections, the nationalized port to the north and the privatitized port in the south. In the northern port, a large crane capable moving 25 transfer units an hour was added. In the south much more dramatic changes are underway. In a meeting with a civil engineer of the Port, he explained the plans for the privatized section. Purchased by a Dubai shipping company, the southern port is planned to be expanded upon in ten total phases. The first two phases alone are expected to cost a total of 1.25 billion dollars. Below is an animation of the master plan to the future Dubai Port in Lima.

For those who are unaware, when an industry is opened to private investment many things can change for the better and the worse. It is evident that by allowing outside investors access to a country's national resources and industries a country can see rapid advancements in the industries of discussion. Other benefits are further evident such as the savings from maintaining infrastructure of the said industries. In the United States for example, many of the power companies are being privatized in efforts to move government funds to other industries in dire need. However, the over privatization of any industry can be detrimental to any country, especially one as small Peru. The first problem to be addressed in the case of the port of Callao is that the Navy is located within the port and privatizing around the naval base threatens national security. Dubai has made offers to purchase the entire port of Callao, but at the Peruvian government’s resilience, Dubai is first expanding on the southern side of the port. It was said best when a worker of Callao explained his concerns and exclaimed, “We are selling the jewels of the crown.” Why should and would one have such concern for outside investors that are expanding revenues and technologies in their country? The answer is that everyone should be skeptical of any policy or notion that has short and fast gains, for history proves that they turn out to be superbly problematic.

Oscar Duran: BA History, MA Urban Sociology, OLLAS Service Learning Staff