Peru: Post Election Expectations Grow

By Cecilia Remón

The victory of nationalist and former army officer Ollanta Humala in the June 5 presidential runoff over conservative lawmaker Keiko Fujimori is a clear sign that there are millions in Peru demanding a more equal distribution of the country’s economic growth.

Humala captured 51.5 percent of the vote over Fujimori’s 48.5 percent, according to final results released June 9. His support was centered in the jungle and highland departments — some of the country’s poorest — while Fujimori won the capital Lima and the northern coast.

Days before the vote, polls had shown the two rivals in a technical tie.

According to Peru’s Central Reserve Bank, the country’s economy has expanded 5.7 percent on average since 2000, but many voters felt they were not seeing the benefits, analysts said.

“We can’t say Peru is advancing if there are so many Peruvians living in poverty,” said Humala in the Dos de Mayo Plaza in central Lima in a speech after the first results were released. “We are going to correct that…with real policies that solve problems in education, health care, infrastructure, as we stamp out corruption.”

Polarized country

A fear campaign against Humala, who has advocated charging higher taxes from mining companies — a big motor of Peru’s economy — was propagated by most of the country’s media. Talking heads, editorials and most notably skewed coverage against Humala said he would cripple the country’s economic growth. Other media reports said he is simply a disciple of Venezuelan President Hugo Chávez, and would instate widespread nationalizations and change the constitution to stay in power indefinitely. The campaign saw results in some sectors of the capital, where Fujimori obtained 58 percent of the vote over Humala’s 42 percent.

Ironically, Fujimori’s father, Alberto Fujimori, who ran an autocratic government from 1990 to 2000 and is currently in jail for human rights violations and corruption, used questioned measures to stay in power during a decade, including closing Congress and fraudulent elections.

But the results were very different in the rest of the country, showing a profound discontent in some of the Peru’s poorest regions.

The government of outgoing President Alan García says that poverty fell from 44.5 percent in 2006, when he began his term, to 31.3 percent last year. But a recent study by the Mesa de Concertación para la Lucha contra la Pobreza, a Peruvian anti-poverty umbrella organization, found that just over

52 percent of Peruvian households are under the poverty line. In urban areas, 39 percent are poor, but 77 percent are in rural areas.

Clearly, the election results show that Peru’s “success story” is not uniform throughout the country.

Now that Humala has promised to improve their situation, he will have to deliver, after he takes office on July 28.

“In the past, it was thought that the economic model would reduce poverty in the long-term and generate benefits for everyone,” political analyst Aldo Panfichi was quoted as saying in La República newspaper. “But Peruvians are not willing to wait 30 years and for it to be their grandchildren and great-grandchildren who receive those benefits. They want to improve their living conditions now. That urgency is what is expressed by the vote for Ollanta Humala.”

But that is not what the business class or conservative media outlet owners believe.

The day after the election, the Lima Stock Exchange plummeted 12.5 percent, the biggest crash in its history, after the local press demanded that Humala give clear signs of where he will steer the economy, even before all the votes were counted and he was officially declared winner.

Economic terrorism

Some analysts, like Peruvian economist Óscar Ugarteche, say that the volatility in markets is a form of “economic terrorism,” a warning of how the financial sector will react to his new government.

However, US banking giant JP Morgan told its clients to take advantage of the drop in Peruvian stocks and bonds to buy up since they could make a profit if economic policies stay on a similar track as they are currently.

This helped the market recover for the next several days.

Spokespeople for Gana Perú, Humala’s political movement, announced that the first social policies to be implemented will be Pensión 65, for people over 65 who do not receive a retirement pension, and a minimum wage increase from 600 soles (US$216) to 750 soles ($270) per month.