The social upheaval does not abate in Peru, which increases the risk that President Dina Boluarte will be forced to resign and replaced by the head of Congress with the mandate to call early elections.
A tragic death toll continues to rise, while there is no certainty that the elections will restore stability. Although the economy has held up, political instability has undermined investor confidence and the outlook appears uncertain.
Former President Pedro Castillo’s attempts to avoid being impeached by Congress culminated in his failed coup attempt, sparking the crisis. Social unrest is not surprising after 16 months of an incompetent and improvised government, perhaps one of the worst in the last 30 years of Peru.
However, the scale of the unrest and vandalism has been fueled by a deliberate political strategy, one, according to intelligence reports, supported by foreign governments (including Bolivia, Cuba and Venezuela) and a series of radical movements (including drug traffickers, miners illegal immigrants, Shining Path supporters, and teachers’ unions) with a view to achieving political goals such as immediate elections, the closure of Congress, and the calling of a constituent assembly.
(It may interest you: Peru: how likely is it that the general elections will be advanced to 2023?).
The scale of the unrest and vandalism has been fueled by a deliberate political strategy, one, according to intelligence reports, supported by foreign governments.
The latter represents the long-standing goal of left-wing politicians from scrap the 1993 Constitution of Alberto Fujimori. Although responsible for Peru’s economic transformation and impressive poverty reduction, the constitutional legal framework is blamed for persistent inequality and is a reminder of autocratic rule during the 1990s. The legacy of the era continues to alienate significant numbers of Peruvians.
A highly polarized and fragmented country with fragile institutions and disenfranchised citizens, Peru has become one of the most unstable countries in Latin America.
During the last six years, the Andean nation has experienced unprecedented political instability with the reorganization of six presidents, three congresses, 15 prime ministers and more than 250 ministers.
According to a global survey conducted by Ipsos, 69 percent of Peruvians agree that traditional parties and politicians do not care about ordinary people, the highest level of citizen disaffection in the region (and third in the world, after Romania and Turkey).
Governance crises have become more frequent since the 2016 elections, and since then no government has won enough support in Congress to complete its term. Furthermore, most of the living former Peruvian presidents face corruption charges or have been imprisoned.
social implosion
According to a Lapop survey from Vanderbilt University, Peru has the highest perception of corruption in Latin America. A clientelistic political system and an ineffective and opaque public sector have severely undermined trust in public institutions.
All these problems, along with a mismanaged pandemic compounded by a combined record of having the highest death toll per capita and the world’s worst economic recession, explain the social implosion in Peru. In short, social legitimacy remains largely elusive and the country is stuck in a bad balance.
(Suggested reading: Cuba’s battle against a Castro-era ‘vulture fund’ for defaulted debt.)
The main challenge is to restore political and social stability to recover progress in a country that was once considered an economic miracle. This is a difficult task due to external downside risks. The baseline scenario is one in which the external environment will not boost economic activity. In fact, 60 percent of the variability of Peruvian GDP growth depends on external variables. A global slowdown and persistent geopolitical risks will limit domestic growth.
Despite strong terms of trade (due to high copper prices), poorly managed social conflicts around mining projects have negatively affected competitiveness and undermined investor confidence.
In addition, social violence and vandalism are generating large economic losses, which can cause a recession. Tourism has virtually stopped due to airport closures and roadblocks, and shortages are driving up fuel and food prices in a context where inflation remains well above the Central Bank’s target.
The evolution of internal demand depends on the behavior of investment and consumption. Public investment is expected to plummet, as it does every four years after regional and local elected officials begin their terms.
Public investment is expected to plummet, as it does every four years after regional and local elected officials begin their terms
Although private consumption largely supported economic activity last year, spending has been mixed by sector. Despite the ongoing fiscal stimulus policies being applied by the Peruvian Ministry of Finance, private consumption will be subdued due to weak labor markets, persistent inflation, and tightening of consumer credit.
GDP growth forecasts are falling rapidly and more poverty is expected. Solid macroeconomic fundamentals are insufficient to improve the outlook, given the high uncertainty about the upcoming elections amid social instability.
close the gaps
It is clear that the persistent social gaps are a breeding ground for popular discontent. Changing this reality demands urgent action to quickly close the gaps in essential services. Otherwise, support for disruptive regime changes will continue to grow.
Having a more functional State that adopts public policies that are more responsive to the needs of citizens, ensuring that the rule of law is respected and maintaining an environment conducive to job creation in the private sector are the only guarantees to restore peace. Social.
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Ideologically driven goals to draft a new Constitution that favors statist policies may further compound the frustration, as unfulfilled expectations will certainly exacerbate social tensions.
Addressing structural problems implies building a more accountable political system and more resilient institutions. This, in turn, requires strong leadership that remains elusive today.
Speeding up elections and proposing referendums to disgruntled citizens will not guarantee better results. Learning from the mistakes of the past and identifying a common agenda in a highly polarized society are essential steps. Understanding this complex reality is difficult, but a widely accepted conclusion is that Peru is at a crossroads.
LUIS MIGUEL CASTILLA
Americas Quarterly
Lime.
Economist. He served as Minister of Finance (2011-14) under President Ollanta Humala and as Ambassador of Peru to the US.
Congress opens the door to early elections
The plenary session of the Peruvian Congress approved on Friday the proposal to reconsider the date of advance of the general elections in the country for this year, which was raised by the president of the Constitution Commission, the Fujimori Hernando Guerra García, instead of for April 2024, as initially planned. The decision was made with 78 votes in favor, 34 against and 7 abstentions, after an intense debate between the different groups that lasted for more than four hours.
Guerra García had asked, surprisingly, on Thursday, to reconsider the vote approved, in the first instance, on December 20 so that the early general elections could be held in April 2024.
After the approval of his request, the president of Congress, José Williams, immediately opened the debate on the eventual new date for the elections, which Guerra García proposed to be held next October.
The project presented by the president of the Constitution Commission proposes that a new president and two vice presidents be elected on that date, in addition to 130 congressmen and 5 representatives to the Andean Parliament, with a possible presidential second round at the beginning of December.
As it is a constitutional reform, this type of voting must have the favorable vote of 87 parliamentarians in two consecutive legislatures. For this reason, if the new project is approved, it must be voted on again by the plenary in the next legislature, which the Constitution Commission has proposed to begin on February 15.
The crisis in the Andean country, exacerbated in December with the removal of former President Pedro Castillo and the protests that have followed, has caused not only political instability but also enormous losses in different sectors; one of the most affected is tourism, which has lost 6.2 million dollars a day, reported the Minister of Commerce and Tourism, Luis Fernando Helguero, to the press.
To try to solve the blockade of the roads, the Ministry of Defense reported on Friday that the security forces, with units of the Armed Forces in support of the Police, began to unblock the roads.
A contingent of 200 troops from the Third Division of the Army supported agents of the National Police (PNP) to clear the Camaná bridge, on the Panamericana Sur highway and one of the main access roads to the Arequipa region, the second in the country .
Defense also pointed out that soldiers from the Vraem Special Command came to the town of Pucará, in Junín, to help the elderly, pregnant women and mothers with minors. For their part, contingents from the Northern Operational Command supported the Police in guarding the Norperuano Pipeline Station No. 6, in the Amazonas region and considered a “critical asset” of the country, with the aim of allowing safe transportation of hydrocarbons.
WITH INFORMATION FROM EFE AND AFP
Shortage due to roadblocks
Provinces in southern Peru – epicenter of the demonstrations – suffer from shortages of basic products, and increased prices of fuel and food. There is a shortage of liquefied gas, the main fuel for vehicles and domestic use in Peru, in Cusco, Arequipa, Tacna and Puno. In Madre de Dios, on the border with Brazil and Bolivia, there is a shortage of food and fuel. Merchants from Juliaca and Puno tripled the prices of items. Peru had an annual inflation of 8.46% in 2022, the highest in 26 years. The protests have generated losses of more than 554 million dollars.
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