Peru’s populist president-elect is scheduled to take office in just one week, and ominous signs are mounting that (campaign promises aside) he will continue his predecessor’s trajectory towards breakneck resource extraction, plunder of the environment, pauperization of the peasantry—and attendant bloody social conflicts. Or, as The Economist puts it, “Ollanta Humala has given strong signals that he will keep Peru’s successful economic policies.”
The guardian of the neoliberal order hopefully notes:
The clearest sign that he means this is embodied in his economic team, announced this week. Mr Humala named as his economy minister Luis Miguel Castilla, who was deputy minister in the outgoing government of Alan García and formerly worked at the World Bank. Another moderate, Salomon Lerner, will be prime minister. Mr Lerner, a businessman, was at Mr Humala’s side throughout the campaign. Julio Velarde, a liberal economist, is to remain as governor of the Central Bank for the next five years. His appointment was welcomed by investors: the Lima stockmarket index climbed by 4.6% the next day.
Leaders of Mr Humala’s Gana Perú (“Peru Wins”) political coalition were disappointed. Javier Diez Canseco, a congressman-elect, said that one of the economists who drew up the president-elect’s campaign platform, a leftist document, should have been named to run the Central Bank. By contrast, Mr Velarde opposes the platform’s proposal to raise the minimum wage by more than 20%. He supports a new law allowing private pension funds to invest 50% of their portfolio abroad, which Gana Perú leaders want to scrap.
The Financial Times is similarly heartened by signs of an imminent betrayal of the Peruvian electorate, writing “Humala softens stance on Peru’s mining sector”:
The election of Ollanta Humala as the president of Peru triggered waves of concern in the mining industry after he had campaigned on a platform of higher taxes and state intervention. Stocks exposed to the country’s mining sector plunged in the sessions following his election victory, yet, the worst fears have proved, so far, to be premature. Mr Humala, who will be invested as president on July 28, has moderated his economic message and has confirmed the current central bank president will keep his job…
The decision to keep respected economist Julio Velarde in his post as the president of the central bank is so far the most clear message that Mr Humala plans to follow the so-called “Lulismo” economic model of former Brazilian president Luiz Inácio Lula da Silva.
Yet, the dangers of higher taxes and tighter state control are not yet over. “In Peru, people know there has been economic growth, but at the same time it hasn’t necessarily reached them,” Mr Humala said ahead of the election, indicating that the miners needed to pay more. His message has since become more nuanced. Ahead of the election his focus was on a windfall tax, suggesting that the corporate tax rate paid by miners could be raised as high as 40 per cent. The current corporate tax rate for miners, at 30 per cent, is relatively low by international standards—a 35 per cent rate is levied in Chile. But now he aims to lift the royalty tax, currently at 3 per cent and talk of a windfall tax is, for now, subdued. Mr Humala and his advisers also say they want to sit down with the miners to negotiate better terms, rather than risk industrial action that could hamper the billions of dollars of investment planned.
Beginning to smack a little of “meet the new boss,” eh? Here’s another telling paragraph from The Economist piece:
Mr Humala will also have his own political baggage to contend with. This starts with his loud and dysfunctional family. His father and one of his brothers are quasi-fascists. Another brother has helpfully compared Ollanta to Libya’s Muammar Qaddafi, saying he would like to stay in power for 40 years. But it was Alexis Humala, another sibling, who caused the new president’s first big headache, by visiting Russia this month, meeting the foreign minister and other top officials to discuss gas and fishing deals. Ollanta Humala claimed this was an unauthorised private jaunt; the Russian embassy quickly contradicted him, saying that Alexis went as a “special envoy” of the president-elect. This fiasco may be one reason why Mr Humala’s approval rating, which climbed to 70% after his victory, has plunged to 41%, according to Ipsos-Apoyo, a pollster.
Or maybe it has to do with his backpedaling on his pledges to take a harder line on the resource industries? Conservative outlets like The Economist of course use the word “fascist” far too promiscuously to refer to Latin America’s populist leaders. But we ourselves have noted the slightly fascist overtones of the Humala brothers’ self-declared ideology of “etnocacerismo.” We fear that Humala could turn out to be more precisely fascist than The Economist intended—attempting to mollify the masses with vague but shrill populism and a mystified nationalism, while giving big capital everything it wants.
We hope we are wrong.