WASHINGTON—Little international attention has been paid to the recent conflict between the Peruvian government and thousands of indigenous people in the oil-rich Amazon region over President Alan Garcia’s attempt to make it easier for tribal communities to sell their land. The issue contains lessons for the entire continent—in which the tension between modernity and tradition is a recurring source of strife.

In May and June of this year, the Peruvian government passed two decrees that reduced the consent necessary for peasant communities, including tribes, to sell their land from a two-thirds majority vote to half of the participants in an open assembly. The norms, aimed at native communities all over the country, triggered a monumental rebellion in the Amazon jungle, an area rich in hydrocarbons that has largely been earmarked for oil and gas exploration and where about 300,000 indigenous people live in abject poverty.

Under pressure from nongovernmental organizations and leaders of indigenous movements, the Peruvian Congress repealed the decrees, but the government is trying to rescue part of its proposal through some form of negotiation.

The authorities argue that changing the protectionist laws would lead to a modernization of some of the poorest parts of the country through massive private investment. Critics argue that the natives would be easily manipulated by big companies whose energy projects would devastate the environment and the inhabitants of the rainforest.

The political confrontation has obfuscated the real problem, which is one concerning property rights as they affect the subsoil. As in other parts of Latin America, the Peruvian government has long claimed ownership of the subsoil. The implication is that, unlike in the United States, for instance, if a person, a family or a community holds a title over a piece of land, they do not own what is underneath it.

Those competing claims are a recipe for disaster. Every time a government wants to encourage economic development by inviting foreign and local mining or energy companies to invest in a project, the residents in or around the relevant area feel threatened. Since the only way for them to protest effectively is to rally behind the politicians and pressure groups that speak in their name, the residents, most often peasants, all too often flock behind people who are interested in their own socialist notions of development or their own careers.

The government’s ownership of the subsoil is founded on centuries-old laws that, according to Enrique Ghersi, a Peruvian scholar who argues for the end of the state’s ownership of the subsoil, have been grossly misinterpreted. Universal principles of ownership that go back to Roman law recognize that people who have a title to real estate extend their dominion below the surface.

In the case of the Peruvian conflict, another issue of principle is at stake. The norms that currently require a two-thirds majority vote for a community to sell the land are a collectivist imposition whose ancestral roots are extremely doubtful. While they do go back to colonial times, when under pressure from the Catholic Church the Spanish Crown sought to protect the native population from the private abuses of Iberian colonists, the legal arrangements were compounded in modern times by socialist experiments that impeded the development of native Peruvians.

The indigenous leaders who invoke "tradition" to keep the two-thirds majority vote are, of course, terrified of letting their own people choose freely. In that respect, Garcia is right to want to allow for more freedom of choice for the members of native communities. But because the government owns the subsoil, what should be a dispute between peasants wanting to exercise individual rights and community leaders standing in their way has become a fight for the survival of the indigenous people against a government willing to let Big Oil usurp their turf.

If the peasants owned the subsoil and its resources, one can only imagine the rebellion that would take place in many of the communities of the Andes and of the Amazon basin against the leaders of organizations such as the Inter-Ethnic Association for the Development of the Peruvian Forest, who have been at the forefront of the recent battle against the authorities. How would they tell a peasant sitting on billions of dollars worth of oil or gas, and willing to either sell, partner with or give a concession to a private investor, that "tradition" requires him to stay miserably poor?