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The rising rejection of leftist populism in Latin American democracies gained a new leader in August with the inauguration in Peru of President Pedro Pablo Kuczynski, an accomplished international economist with progressive social goals. Flanked by fellow presidents from Argentina, Colombia, Chile, and Mexico, Kuczynski took office on July 28 as part of a fresh political lineup in Latin America that stands opposed to the radical socialism championed by Hugo Chavez, the late Venezuelan strongman, and his handpicked successor, Nicholas Maduro. This authoritarian statism has contributed to a decade of economic decline for most of Latin America’s 600 million people, most dramatically in Venezuela.
As a sign of Lima's growing distance from Caracas, the Peruvian congress adopted a declaration last week calling on Maduro to release political prisoners and respect a vote to recall him as president. That declaration was followed by Peru’s joining a resolution in the Organization of American States that called on Venezuela to negotiate with the opposition for a solution to the humanitarian crisis caused by food and medical shortages. This resolution, supported by the United States and 14 other countries, including Argentina, Brazil, and Mexico, was condemned by Venezuela as interference in its internal affairs. Only three other countries—Bolivia, Ecuador, and Nicaragua—voted on Venezuela’s side.
Kuczynski’s five-year presidency got off to a fast start with a majority approval in congress of his cabinet on August 19 (of 130 legislators in the house, 121 voted in favor). Opinion polls gave Kuczynski’s moderate political style and outreach to the opposition a 60 percent approval rating. Only the hardline leftist parties aligned with Venezuela voted against the new cabinet after Chief Minister Fernando Zavala explained in detail the government’s economic and social program. Zavala said the primary goal was to reduce poverty from 22 percent to 15 percent in five years and expand Peru’s economy with annual growth of five percent. Peru’s minimum wage is equal to $285 monthly, so there is further room for improvement if the economy grows more quickly. Kuczynski’s pledge to “modernize” Peru’s economy targets poverty reduction through more productivity along with social investments in education, health, and housing.
Peru, thanks to its geography and natural resources, is one of South America’s most promising countries, ready to build on its annual 4 percent economic growth. From a Western coastline on the Pacific with 1,000 miles of beaches and ports, it is a springboard to Asia. (In fact, China is Peru’s largest trading partner, and Kuczynski recently announced that he will make China his first foreign visit in September.) Peru also stretches upward to Andean highlands, rich in minerals and irrigated agriculture, and then drops to a deeply forested Amazonian interior with rivers that empty into Brazil and Colombia. With shared borders with five countries, Peru is a logistical hub for South American integration. The country’s economic potential is great thanks to a relatively educated working-class population and a lively private sector. But for Peru to achieve its economic potential, it needs more foreign capital and a clearer strategy to promote investment in infrastructure, energy, and mining.
In his inaugural address and cabinet presentation, Kuczynski promised to reduce poverty and boost Peru’s economic growth, but he didn’t stop at generalities. He spelled out how he planned to achieve six priorities, ranging from public security through major police reforms to a national program for local water works and small irrigation projects that are vital for improved health and food production in rural areas, where Peru’s poor are concentrated. On income distribution, Kuczynski said he would work to bring a majority of Peru’s workers, of whom 60 percent are informally employed, under formal contracts with employers who would provide access to unemployment insurance, vocational training, and ultimately higher wages. On major investments, he said his government would complete a gas pipeline project that has been stalled for years. The pipeline would expand the country’s petrochemical industry and offer huge export potential. Kuczynski said he would actively mediate disputes between mining companies and traditional indigenous communities that have paralyzed major foreign investments. His first week as president included a trip with his mining advisers to meet with wildcat gold miners whose destructive extraction methods have devastated an important ecological zone on the Madre de Dios river in the Amazonian border with Brazil. He offered loans to the miners who accept legal regulation.
Kuczynski is well qualified to carry out his modernization program. He has previously served as prime minister, minister of economy, minister of mining and central bank researcher, and a World Bank and International Monetary Fund staffer. He was an executive at international investment firms and mining companies. He has written extensively on economic development strategies for Latin America and Peru and is a proponent of free markets and private enterprise.
He is also a champion of constitutional democracy and the rule of law. He has consistently opposed political interventions by Peru’s military—and has suffered the consequences for it. When a leftist military coup toppled the democratically elected government of President Fernando Belaunde Terry in 1968, Kuczynski protested and was forced into exile. He only returned to Peru when the armed forces had restored democratic elections in 1980.
Although Kuczynski has spent much of his professional life involved in government affairs, he is a latecomer to electoral politics. His debut as a candidate for elective office came in 2011, when he ran for president with a makeshift alliance of small political parties. He finished a poor third in a race won by Ollanta Humala, a former army colonel from a nationalist family, who defeated the runner-up candidate, Keiko Fujimori, the daughter of former President Alberto Fujimori. Alberto Fujimori is serving 25 years in jail on charges of human rights violations during his war against the revolutionary guerrillas of the Maoist Shining Path insurgency. The violence on both sides resulted in 67,000 deaths, mainly in rural areas, and polarized Peruvian politics. Many Peruvians think that Fujimori and the armed forces saved Peru from a Maoist dictatorship and brought economic stability. Others, particularly those on the political left, reject Fujimori because of the violent repression and corruption.
Humala and his Nationalist party were anti-Fujimori and were considered allies of Chavez, who sent money to finance Humala’s campaign. But Humala stayed clear of the Venezuelan strongman’s populist movement. And, as the populist regimes fell apart, Peru maintained annual growth at close to 4 percent, cashing in on mining exports, international tourism, and steady domestic consumption without inflation. But Humala was constitutionally barred from running for reelection, and the presidential election in 2015 again pitted Kuczynski against Fujimori’s daughter, Keiko, and a new leftist candidate, Veronica Mendoza, a French-educated sociologist and educator. In the opening round, with six candidates, Fujimori won twice as many votes as Kuczynski did, but she fell short of a majority, and Mendoza finished third with nearly 20 percent of the vote. In the final runoff, Kuczynski narrowly won with 50.2 percent of the valid votes. Since his narrow win, however, Kuczynski has earned growing public support. He has an engaging, cheerful personality; dances to Peru’s rhythmic folk music; and is an accomplished musician who leads crowds playing the flute during sing-alongs of Peruvian folksongs. His political personality is engaging, not aloof, he can be witty and likes jokes, but he is serious about public matters.
Kuczynski’s career in public administration and private management provided him with professional contacts who are evident in the makeup of his cabinet. Kuczynski’s presidency will be conducted by a government of 19 ministers, including six women. They are a handpicked team of young Peruvians chosen for their managerial expertise rather than political connections. Some have given up high-paying jobs in international enterprises, such as Fernando Zavala, the chief of cabinet, who was a chief executive of SAB Miller, and Alberto Thorne, the minister of finance, who was chief of Latin American operations for Goldman Sachs.
Kuczynski will, of course, face some difficulties in governing. In the June 2016 congressional vote, the political party of the Fujimori supporters, Fuerza Popular, won a sweeping victory, pulling in 73 of the unicameral legislature’s 130 seats. Kuczynski’s Peruanos para el Kambio (PPK) won only elected 18 deputies. As a result, Kuczynski will need to negotiate with the Fujimori bloc on all legislative measures, including approval of the annual budget, and delegation of powers required by the executive to implement its program.
Those negotiations will be a major political test for Kuczynski, the pragmatic politician who hopes for an early start on his plans for modernizing Peru. Fujimori has said that her party will not be “obstructionist” but will weigh each request from the executive from its own political standpoint. For his part, Kuczynski has negotiating skills and puts results ahead of doctrinal purity. And both sides likely know that an impasse would weaken the Peruvian democratic system, which operates under a semi-parliamentary presidency, in which the president is chief of state but appoints a premier as chief minister of a cabinet that must be ratified by congress and that can be brought down by a vote of no confidence by the congressional majority. Peru’s system is more democratic than are the all-powerful presidential systems found in most Latin American countries, but it is vulnerable to paralysis should party politics become radicalized. Peru will thus offer an important test of consensus and cohesion for a Latin America that is searching for more representative politics.