Peru’s presidential candidates squared off in the first round of voting April 10. Keiko Fujimori, the first-place winner, and Pedro Pablo Kuczynski, in second place, now face a runoff vote in June.
Regardless of who wins, Peru’s next president will have to juggle tough challenges. With global commodity demand down and tight competition for foreign investment, it won’t be easy to keep the country’s economy afloat. Balancing environmental trade-offs and other concerns of the rural population without sacrificing economic growth puts a severe strain on the current administration.
These same tensions will test Peru’s incoming administration. Here’s why.
1. Foreign investment has fueled Peru’s breakneck economic growth in recent years. Foreign companies involved in resource extraction are a major source of investment dollars. Production, exports and jobs rely on steady foreign demand for gold, copper and other commodities.
When global manufacturing slows down, Peru’s economic growth is at risk. In 2015, exports amounted to $33 billion, almost a third lower than 2011 exports. Peru is the world’s third-largest copper exporter; ores and precious metals account for half of the country’s exports.
Many foreign companies in Peru have worked with local communities to build schools and health clinics, and fund road-building and other public works. But other foreign firms have drawn criticism for hiring few local workers, contaminating local resources and taking advantage of weakly enforced environmental laws.
2. Local protests against foreign companies are becoming louder and more frequent. President Ollanta Humala declared a state of emergency in several highlands provinces in October after large-scale protests over a Chinese mining venture left several dead and scores wounded. Protesters wanted more local jobs — and a better plan to protect the environment at the copper mine project. Humala’s response to the protests — flooding the region with military and police personnel while declaring the violence the work of outside rabble-rousers — is unlikely to stem popular resistance to the influx of foreign mining projects.
There’s deep discontent among indigenous people in the Peruvian highlands, particularly among groups and villages that feel they have been losing out on development for years. The last time there were sustained protests of this magnitude — in the early 1960s — the military ultimately seized power and delivered on protesters’ main demand: land reform. My recent book, “Autocracy and Redistribution,” documents how for the first time since before Spanish colonization, many communities came to own their own land.
3. Land issues continue to shape expectations about economic prosperity throughout Peru. The breakup of rural cooperatives in the 1980s and 1990s delivered land directly to families. President Alberto Fujimori — father of current presidential candidate Keiko Fujimori — initiated massive land-titling efforts, boosting land tenure security and giving landowners more ability to leverage land as collateral for bank loans for local investment.
Rural sectors therefore looked to current President Humala to deliver on campaign promises to stem the re-agglomeration of land by agribusiness and foreign investors following the land titling programs. But the need for — and benefit of — foreign capital-driven economic growth effectively peeled Humala away from the constituents he had promised to represent. Local vs. foreign land-use conflicts in Peru have become more prevalent as a result.
Whoever succeeds Humala in June will inherit this tension. Peru’s rural sectors are unlikely to be complacent in their expectations for Peru’s next administration.
Anticipating this pressure, Keiko Fujimori, the presidential front-runner, recently promised to implement progressive policies to boost social spending and expand the reach of social programs to those in need. She also criticized Humala for putting business interests before the needs of people in rural sectors at a high-profile mining and investment summit in Lima several months ago.
But Peru’s party system is notoriously weak and undisciplined, and leaders have flipped sides on issues with some frequency. Either presidential candidate could veer drastically in a similar fashion as Humala. Both candidates back free-market economics, and are seen as pro-business. The rural sector is all too aware that their interests could be at risk regardless of who wins, which is part of the reason it has mobilized so forcefully to make the government listen — and act — on critical issues of land use, environmental protection and jobs.
Fujimori and Kuczynski beware: The winner could be in for a rough ride.
Michael Albertus is an assistant professor at the University of Chicago, where he focuses on the political conditions under which governments implement egalitarian reforms. His first book, “Autocracy and Redistribution: The Politics of Land Reform,” was recently published by Cambridge University Press.