The left-wing presidential candidate in Peru is worrying its business elite

Wearing a huge cowboy hat and holding a giant yellow pencil – the symbol of his political party – Pedro Castillo cut a colorful folk figure as he travels the length of Peru’s campaign for the presidency.

But among the business elite in Lima and on the boards of the mining companies that generate so much of Peru’s wealth, no one feels the fun.

Castillo, a 51-year-old school teacher and union leader, has emerged from political obscurity To win the first round In the elections last month on a Marxist card without shame.

His party, Peru Liber (Free Peru), wants nothing less than a revolution in the fifth most populous country in Latin America, aiming to overturn the free-market model that has ruled the country for a generation.

The party says in its statement that foreign mining companies should be forced to pay 80 per cent of their profits to the state instead of paying the 10, 20 or 30 per cent “miserable” they are now paying.

If the companies do not accept the new conditions. . . The country must go ahead with nationalization, “warns Peru Liber.

The party’s founder, Vladimir Serón, has appointed Hugo Chávez and Nicolas Maduro from Venezuela, Daniel Ortega from Nicaragua, and Fidel and Raul Castro in Cuba as part of “a select group of presidents who have bestowed dignity on the continent.”

“The program is a return to the 1970s,” said Roxana Parantes, a professor of economics at the Pontifical Catholic University of Lima. You read it and think, “Oh my God, what is this ?! ”

Unsurprisingly, financial markets were shaken – not just by Castillo’s big first-round victory but by subsequent polls indicating that he is enjoying a significant lead over next month’s run-off rival, Keiko Fujimori, daughter of the country’s former authoritarian president. Alberto Fujimori.

In the two weeks following the first vote on April 11th, the Peruvian currency, the Sol, fell more than 4 percent and hit a historic low of 3.85 to the dollar, while the stock exchange tumbled more than 12 percent. The spread between 10-year sovereigns and U.S. Treasury bonds widened by more than 71 basis points and the cost of guaranteeing against default rose, as the five-year default swaps reached their highest level this year after the first round.

One Recent business survey It found that three-quarters of Peruvian companies have suspended their investment plans until after the June 6 elections.

“We have no information yet about capital flight, but all the anecdotal evidence indicates that people are looking to get their money out,” said Alonso Segura, the former finance minister.

“I have friends who are inundated with wealth and are opening bank accounts for people in Panama and the United States. It’s hard to tell how widespread and representative this is, but it sure does.”

Kiko Fujimori challenged the first presidential candidate, Pedro Castillo, in an impromptu debate. © Francisco Vigo / Reuters

It is unclear to what extent Castillo believes in the radical statement by Peru Liber, which also calls for a new constitution drafted by a popular assembly and a reassessment of the country’s free trade agreements.

Perhaps afraid of wasting his progress, he gave few interviews and abstained from the idea of ​​presidential debates.

Knowing that she must go on the offensive, Fujimori traveled last weekend to the town of Chota, high in the Andes in northern Peru, where Castillo is an electoral base. There, she challenged him to an impromptu debate on a hastily arranged stage in the town square.

According to his party’s statement, Castillo surrendered to the foreign multinational companies that he said “they plundered the country.”

“Gold, silver and zinc should be for Peruvians,” he said. “The time has come to elect a man of the people. No more poor in a rich country!”

For those worried about Castillo’s presidency, there is consolation in the mathematics of Peru’s fractured political landscape. At the next convention, Peru Liberia will be the largest party with just 37 of the 130 seats.

Even with the support of other leftists, it will struggle to garner a third of the parliamentary vote Castillo would need to avoid impeachment, not to mention the two-thirds he would need to change the constitution.

“Look at his proposals. They cannot be implemented unless you have absolute control of Congress.” He said the big mining companies would simply leave if Peru turned sharply left.

“Given the price for copper is where it is, most of the mines around the world are profitable. You don’t need to be in Peru to mine copper.”

With a month left, Fujimori still has a chance to win, although she is trailed by nearly 10 percentage points and hated by many Peruvians, who pair her with her father’s divisive rule in the 1990s and obstruction of her career as a congressman in recent years.

More than two-thirds of the electorate did not vote in the first round for any of the candidates. About 10-18 percent said they did not know who would turn away per second, and up to a quarter said they would spoil their ballot papers.

“The problem with the run-off between Castillo and Fujimori is that many voters find both candidates fundamentally rejected,” said political consultancy Teneo.

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