Peru ushers in a new era

Pedro Castillo after being declared president-elect of Peru

By Vijay Prashad and Jose Carlos Llerena

ON June 6, results began to come in from the second round of Peru’s presidential election. It appeared early on that the race was tight. Peru Libre’s Pedro Castillo held a slim lead over Fuerza Popular’s Keiko Fujimori. Castillo, a school teacher from a rural district of northern Peru, ran a door-to-door campaign amongst impoverished Peruvians, while Fujimori, the daughter of a former president who is now in prison, ran a television campaign that was lubricated with large amounts of money. This was a two-way fight between the Left (Castillo) and the Right (Fujimori). The National Jury of Elections (JNE) did not certify the result that night. Nor would it do so in the week ahead. In fact, it was not until July 19 that the JNE would close the election, with Castillo ahead of Fujimori by a mere 0.26 per cent. Fujimori reluctantly conceded the race. Pedro Castillo will be inaugurated as Peru’s next president on July 28, Peru’s Independence Day.

Peru’s economic conundrum

Since 2014, as commodity prices collapsed, Peru’s economy spluttered, ending a 12-year uptick in the GDP. Peru is the world’s second largest exporter of copper and a key exporter of zinc and precious metals. Over the past two decades, Peru has begun to export non-traditional agricultural products, such as asparagus and fruits. It had also become a destination for tourism (which accounted for 10 per cent of GDP). World commodity prices define the social and economic situation in Peru. But there are great vulnerabilities in the country. While it exports copper and zinc, Peru is reliant upon imports of food – including wheat; imports of wheat from Argentina, Russia, and the United States define how much the working-class and poor Peruvian households can eat. While copper prices fell over the past decade, food prices have risen, causing demand for food grains to collapse by 50 per cent and causing poverty to rise to 30 per cent of the population of 33 million people.

Part of the growth in Peru’s economy came from its close linkage to the Chinese economy. Since 2014, Peru’s largest trading partner has been China, which buys $58 billion worth of goods; the US, which used to be Peru’s main trade partner, buys $33 billion worth of goods. Two-thirds of Peru’s copper exports go to China (two of Peru’s copper fields – Las Bambas and Toromocho – are controlled by the Chinese firms MMG and Chinalco). These Chinese firms have been part of an overall Chinese investment into Peru that totals $30 billion. China and Peru signed a Free Trade Treaty in 2010. Three major Belt and Road investments are underway in Peru: a port in Chancay that has received an investment of $1.3 billion, the Amazonian Waterway (being built by Sinohydro), and the Transcontinental Railway that will link Peru’s Bayóvar port to Brazil’s Santos port. The US assault on Chinese businesses in Latin America will impact the future of these deepening ties.

When the pandemic hit Peru in 2020, it came at a time of economic downturn. Firstly, Peru recorded 150 per cent excessive deaths (180,000 due to the pandemic), far more per capita fatalities than Brazil. This was largely to do with the privatisation of public health care over the past few decades, the lack of investment in medical care, and in the erratic lockdown policy as the governments sought to send workers back into the mines to mitigate economic losses. By the time of the presidential election, only 4 per cent of the country’s population had been vaccinated (compared to 40 per cent in Chile and 10 per cent in Brazil). With only 38 per cent of Peruvians with bank accounts, the various digital forms of relief simply did not reach those who needed the support the most. The shuttering of the tourism sector and the slack demand for mined commodities from China because of the global slowdown hit the economy very hard. Peru’s GDP fell by 11.6 per cent in 2020.

Political convulsions

Peru’s political culture was reshaped in the 1990s during the war against the Shining Path (Sendero Luminoso) and because of the failure of the Lima elite to seriously reform the inherited political system. The war against Sendero afforded the elite the opportunity to lean on armed force to suffocate any challenge to its rule. At least 70,000 people died in that conflict, which ended in 1992. Older Left currents had been eliminated by Sendero, by the Peruvian military and police, and by the disarray of the South American Left after the fall of the USSR. Keiko Fujimori’s father Alberto ran for president on the Cambio 90 right-wing platform; he won 62 per cent of the vote in the presidential election of 1990 to inherit a country that was ending the Sendero insurgency and was emerging from a decade of economic stagnation (la década perdida). When Fujimori campaigned, he spoke of the need for reform, but when he governed he drove a hard austerity agenda (although he used revenues from privatisation toward poverty alleviation). Challenged by the legislature, Fujimori conducted a ‘self-coup’ (auto-golpe) – backed by the military – and used violence to cement his authority.

The 1993 constitution – driven through by the Fujimori dictatorship – strengthened the presidency and opened the economy to full-scale privatisation and to the private sector. The outcome of the Fujimori decade set in motion the structure of Peru’s current political convulsions:

First, in reaction to Fujimori’s centralisation of power in the presidency, the political class strengthened the legislature and weakened the president. It is now easier for the Congress to impeach the president, which is indeed what has occurred to Fujimori (2000) and Martín Vizcarra (twice in 2020). The political rules led to the fragmentation of the Congress, with 10 parties represented in Congress (in 2016, there were only six). Increased fragmentation is not always on ideological or even pragmatic lines; it is often a function of personal ambition, with a tremendous appetite for the sale of votes in the Congress as an increasingly normal activity.

Second, the rise in revenues from high commodity prices and the lack of political control of the institutions of mining led to a remarkable increase of corruption (including inside the judiciary, such as in the White-Collar Group or Cuellos Blancos). Since 1990, all of Peru’s presidents have either been convicted or indicted (barring Alan García who committed suicide when facing charges). At the heart of this scandal is a Brazilian company – Odebrecht – which impacted the major political forces from the far-right to the centre-right (including Keiko Fujimori).

Finally, due to the war on Sendero, the country had until now not been able to develop either an authentic Left-wing party or even a party of the indigenous. Politics revolved around Lima and its elite. Alejandro Toledo (president from 2001 to 2006) was the first indigenous president of Peru, but he neither carried forward an indigenous agenda nor did he develop a popular – let alone socialist – programme. When Ollanta Humala ran on the Left in 2006, he was defeated, and then refashioned himself as a neoliberal for his successful presidential run in 2011. Without an adequate Left, Peru’s right-wing has been able to dominate politics. Fujimori ran on the right this year, her campaign shaped not around the suffering of the people but around using a ‘hard fist’ (mano dura) to confront criminal activity and to extend the neoliberal economic policies.

Arrival of Pedro Castillo

Pedro Castillo comes from the public-school teacher’s movement, which – in 2017 – paralysed Peru in a wave of strikes. Castillo shook up the Sindicato Único de Trabajadores de la Educación Perú (SUTEP), which had previously become used to the habits of conciliation with the State. Castillo and his comrades led SUTEP to fight the extremely low wages paid to public school teachers as compared to teachers in the growing private sector. These strikes came alongside strikes of public health workers and miners. 15,000 teachers rallied in Lima during that wave of unrest. It is what shaped the emergence of Castillo as a key figure of popular working-class struggles.

Perú Libre, founded by the Marxist-Leninist doctor Vladimir Cerrón, had initially hoped to run Cerrón as its candidate, but legal cases against him prevented this. Cerrón then asked Castillo, his vice-presidential candidate, to lead the ticket. Perú Libre is the first Left-wing party in many years to establish itself with a mass base, with a slogan that directly confronts the contradictions of Peru’s wealth (no more poor in a rich country – ¡No más pobres en un país rico!). He appeals directly to the working-class, the poor, and the indigenous, which is why large swathes of rural Peru voted in enormous numbers to elect him. His surge in the first round rattled the Lima elite, which is why Peru’s currency – soles – slipped and why money fled the country in anticipation of the second round.

Castillo and Verónika Mendoza of Nuevo Perú released a four-point pledge for universal vaccination and for the creation of a robust healthcare system, for job creation through establishing sovereignty over raw materials, for an end to political corruption, and for a strengthened democracy. This pledge forms the basis of Castillo’s call for a constituent assembly to rewrite the 1993 Fujimori constitution. These four points would include less power to the private sector, the creation of a robust national project for development, and a better organisation of mining revenues (which are currently earned by regional governments from which resources are extracted, and are not used for national development).

The two men most likely to run Castillo’s economic policy – Oscar Dancourt (formerly of the central bank) and Pedro Francke (formerly of the World Bank) – have signaled that they will not do anything to impact the inflation-targeting system set in place decades ago. They have said that Peru will honour its debts (external debt is 44 per cent of GDP). With copper prices at an all-time high, Castillo could take advantage of it to drive a distributionist agenda and not fundamentally change any of the structures of Peru’s economy. This would be a missed opportunity to reshape the economy to favour the working people of the country.

When Keiko Fujimori, backed by the Lima elite, tried to prevent Castillo’s victory, his base of poor Peruvians galvanised into a mass movement to defend the result. In this period, new confidence has been built and a strengthened political will to defend Castillo who will face opposition at every stage (including the possibility of impeachment). There will be a permanent political bloc of the old elite, which will use every mechanism to stifle Castillo or to coopt him. But that galvanised base seems to be prepared to continue its mobilisation, which gives Castillo the strength to demand a constitutional process and to demand that the four-point pledge be taken seriously. This base can rely upon the Left in the Congress, although it does not command nearly enough strength to prevent the machinations of the right-wing (out of 130 members, the Left can count on 37 from Perú Libre, 5 from Medoza’s Juntos por el Perú, and 1 from Fuerza Ciudadana).

Castillo will soon sit in the presidential seat in the House of Pizarro in Lima. The right-wing likes to use the term terruco to describe Leftists in Peru. It has an association with terrorism, which comes from the history of Sendero Luminoso. But the term has a racist connotation, used as it is against the indigenous people of the Andes. Here we have the fusion of anti-communism and racism, and here sits Pedro Castillo, an indigenous man of the Left. He has a historic opportunity to open Peru towards democracy and justice. Will he be able to succeed?

The above article was originally published here by Peoples Democracy.