The Road to Riches the Road to Ruin: Brazil's Decision to Pay for the Development of a Route Linking the Country with Peru's Pacific Ports Is Viewed by Many as Vital for the Economies of Both Countries. but Those Who Live along the Route Fear That, While It Will Bring Prosperity for Some, the Road Will Also Bring Social and Environmental Problems for Others

Article excerpt

Abraham Cardozo's arm sweeps over the cut planks: mahogany, shihuahuaco and tropical cedar stacked in neat piles. In places, the wood reaches higher than our heads. A young woman checks the inventory; another half dozen are busy at their various stations. The open warehouse baking in the tropical sun, is a hive of activity: screeching, sawdust, sweat and the occasional shout.

"I'm the third generation of my family to work in this area," Cardozo tells me, his thick-set frame testament to years of hard physical labour in the forests. "First, it was the rubber boom, then the gold rush, then logging. We've been through it all. This place was completely abandoned for 40 years. I didn't see a television until I was 17."

Beyond the warehouse, trunks more than a metre in diameter await their turn in rows some six trunks wide and six deep. The trees come from the 98,500-hectare concession that Cardozo's company owns along the Brazilian border in the Peruvian department of Madre de Dios in the country's southeast. Later this year, Cardozo hopes his company will achieve Forest Stewardship Council certification for its products, only the second company in Peru to achieve this benchmark in sustainable forest management.

The outlook for Cardozo's company might be rosy, but there's a dark cloud on the horizon: the Interoceanic Highway. The paving, renovation and improvement of the road that connects Brazil with Peru's Pacific ports is one of the projects of the Initiative for the Integration of Regional Infrastructure in South America (IIRSA). The initiative, which began in 2000 in Brazil, is aimed at physically integrating all 12 South American countries through transport, energy and telecommunications infrastructure.

The Interoceanic Highway, or Interoceanica, as it's known in Peru is the first project to roll off the IIRSA mill. Total cost: an estimated US$1.3billion (0.7billion [pounds sterling]). So far, Brazil's National Development Bank (BNDES) has provided US$400million for the segment between the Brazilian state of Acre and Cusco in Peru. Additional funding has come from the Andean Finance Corporation (CAF). Peru's former vice-minister of economy, Patricia Teullet, claims the road will eventually cost Peru a percentage point of its annual GDP.

The Brazilians' willingness to pay for the paving of a road front the Brazilian Amazon up and over the Andes and back down to the Pacific may sound surprising, but it's actually a national priority. At present Brazil's Amazon products either have to be trucked all the way south, over the Andes to Chile's ports, or shipped from Amazonian or Atlantic ports and then around Cape Horn, both of which are expensive routes. With the coming of the paved highway, Brazil's central, northern and western exports--its tropical hardwoods. beef and increasingly, its huge soybean production--will be able to reach the markets of the Pacific Basin faster and cheaper. The Peruvians hope that, in turn, their exports--including potatoes. coffee wool and cement--will boom.

Brazil already sends 18 per cent of its exports to Asia. It's now the world's second-largest soybean producer and its major beef exporter. Both of these industries are responsible for the high rates of deforestation in Brazil's Amazon. Although overall deforestation is thought to have decreased recently, huge amounts of forest have been cleared and will continue to disappear. The western Amazonian state of Mato Grosso, about 1,500 kilometres west of Cardozo's concession, felled an area of rainforest equivalent to that of Belgium in 2003 alone. Deforestation along the road between Cusco, Puno and Madre de Dios' capital Puerto Maldonado nearly doubled between 1995 and 2005 to 360,000 hectares per year.

The fear is that the highway will not only increase the rate of deforestation in both countries, but will also increase the pressure on Peru's forests, especially if the country emulates Brazil's agricultural development. …