PERU: Microsoft's Big Stick

BUENOS AIRES -- Afraid that Peru may adopt a bill decreeing the use of open-source software in all government systems, Microsoft apparently enlisted the American ambassador in Lima to help try to convince the Peruvians to kill the legislation.

Wired News has obtained a copy of a letter sent by U.S. Ambassador John Hamilton to the president of the Peruvian Congress, expressing his dismay at the proposed legislation.

Congressman Edgar Villanueva, the bill's chief sponsor, said he considers Hamilton's letter to be "overt pressure" on Peru by the United States and Microsoft. If so, the letter would continue the long-standing U.S. tradition of meddling in Latin American affairs, political analysts say.

In his June letter, Hamilton said that while the United States doesn't oppose the development of open-source software, it prefers to support a free market where the quality of the product can determine the issue.

He added that by excluding proprietary software companies like Microsoft, Peru would be hurting an industry that "has the potential to create 15,000" jobs in the local economy.

Not all the pressure come from the U.S. government. Bill Gates was in Peru recently, too, making a donation of $550,000 to the national school system. It seems unlikely that Gates would be contributing money to anything that cuts Microsoft out of the picture, Peruvian critics say.

Microsoft's investment in Peru is estimated at $50 million, and Gates flew south to personally make the donation to Peruvian President Alejandro Toledo, no doubt hoping it would help kill the bill.

The legislation, Bill Number 1609 (known as Free Software in Public Administration), was introduced by Villanueva through Peru's ruling party, Peru Posible. It includes a provision, known as Plan Huascaran, that would provide computers with Internet connections to the same schools where Gates' $550,000 is supposed to go.

Open-source advocates suspicious of Gates' motives demand that details of any Gates-Toledo deal be made public.

The bill's backers, meanwhile, insist that Peru will be able to computerize more quickly, efficiently and cheaply by using open-source software.

The bill would require companies doing business with the government to open their programs' source code to scrutiny. Supporters maintain that open source is the only way the government can guarantee its citizens real security for their data.

Free-software advocates also claim that besides the operational advantages, open-source programs are less costly, a claim that has been energetically denied by Microsoft Peru.

Microsoft's Andean subsidiary claims that the cost of converting state systems will be huge no matter which software is adopted. But the open sourcers argue that replacing the pirated software that currently runs most systems with duly licensed programs like those of Microsoft would be far more expensive. It's the cost factor, along with the bullying factor, that gives the government pause.

The escalating debate has raised tempers, too. Alberto Gonzalez, Microsoft Peru's president, got the ball rolling in a letter to Villanueva. He appealed to the idea of free competition -- a concept Microsoft is not generally credited with respecting -- and claimed that Villanueva's bill "breaches the principles of equality before the law, that of nondiscrimination and the right of free private enterprise, freedom of industry and of contract, protected by the Constitution."

Villanueva scoffed.

In his reply, Villanueva accused Microsoft of trying to get the state to subsidize proprietary software companies, as well as trying to take advantage of its dominant position.

Hamilton's letter to the Congress may only throw gasoline on the fire, since South Americans are already sensitive to the constant threat of U.S. meddling.

Tensions were already running high following a recent statement by Hungarian-American multimillionaire George Soros who, referring to the upcoming presidential election in Brazil, said that Brazilians have to put up with the likes of himself. "In global capitalism, the only voters are Americans," he was quoted as saying. "Brazilians do not vote."

Soros predicted that Brazil would be forced to vote for Washington's choice, Jose Serra, or face economic chaos. His remarks did not go down well, inside Brazil or out.

On a smaller scale, then, why is Microsoft so worried about what happens in Peru, should their efforts there fail?

"They are terrified," Villanueva told Wired News. "They insisted once and again that Peru (represents) but an insignificant portion of their total income. What worries them is the cascading effect that could be triggered if a national state took such a decision."

Attempts to reach Gonzalez, Microsoft Peru's president, failed. The company did not reply to the question of whether Gates' donation means that Microsoft has cut a deal with the Peruvian government.

Latin American countries have generally welcomed the spread of free software. The licensing system tolerates it, and the economy of open-source software is appealing in a region where social and economic crises are common.

In Argentina, a university lecturer developed a Linux OS distribution that is freely distributed among his students. And a bill that would mandate the use of open-source software throughout Argentina's government departments is pending in Congress.

Similar bills have been introduced in Mexico, Brazil and some Spanish regions.

"We are not against Microsoft software nor proprietary software," says Villanueva. "It is only that it is not the best option available. Maybe it is so for European countries, but not for us."

Again, it's the cost.

Villanueva pointed out that the state has recently begun paying water and energy bills on behalf of many schools. "(T)hey are so poor that they could not afford these services, and the provision was being interrupted," he said. "Does it make sense in this context to use tax-payer's money to pay Microsoft licenses?"

Read the Spanish version of the story.

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