Nationalist Humala wins election in Peru, unnerving investors


Peru's newly elected President Ollanta Humala makes the victory sign in Lima, the day after winning the election. (MARIANA BAZO/REUTERS)
June 6, 2011

Ollanta Humala, a nationalist former army officer who won Peru’s presidential election Sunday, has sworn on a Bible that he is not the same radical who first emerged in 2006. Back then, in a failed bid to win the presidency, he had pledged to intervene in the economy and take Peru into a leftist orbit led by Venezuela’s populist president, Hugo Chavez.

With results Monday showing that he had edged out Keiko Fujimori, daughter of a disgraced former president, to lead Peru over the next five years, Peruvians are asking themselves which Humala will govern. Will he be the fiery leader who had once pledged to overturn the economic order or the moderate centrist who said Sunday night that his government would “promote more investment”?

“It’s the big question we are all asking ourselves,” said Alfredo Torres, who directs the Ipsos Apoyo polls in Lima.

Investors, to be sure, were unnerved, prompting the suspension of trading after Lima’s stock exchange plunged 12.5 percent. The stocks of some of the world’s biggest copper and gold mine companies were off by 20 percent, and regulators urged Humala to name a cabinet to calm investors.

The Humala who had once sent tremors through the Andean country of 30 million was the former lieutenant colonel who commanded an uprising in 2000 and encouraged his brother when he, too, led a revolt five years later. In the election in 2006, Humala had expressed admiration for Chavez, who is not popular in Peru, made antagonistic comments about neighboring Chile and promised to squeeze transnational mining companies.

But Dennis Jett, a former U.S. ambassador to Peru who teaches at Penn State University, said that a new, more centrist Humala seems to have emerged. Instead of promising a complete break with Peru’s economic order, Humala talks of emulating Brazil’s center-left government, which has lifted millions from poverty through a mix of orthodox economic policies and innovative social programs.

“I’m cautiously optimistic that it’s going to be the Brazilian Humala instead of the Venezuelan Humala,” Jett said.

The former ambassador also noted sharp differences between the Venezuela of 1998, when Chavez was elected, and the Peru of today. In 1998, Venezuela was in the throes of a grinding economic slide, which gave resonance to Chavez’s message of a sharp break with the past. Peru, though, has registered the fastest economic growth in South America over the past decade, with poverty falling 15 percentage points.

Peru’s past experiences with leftist governments — the Velasco military dictatorship in the 1970s and Alan Garcia’s government in the 1980s, which nationalized the banks — also left the country in economic tatters.

“I just think that Peruvians are less susceptible to these appeals for extremist solutions,” said Jett, noting that Garcia embraced economic orthodoxy in his second term as president, which began in 2006.

Humala also faces political realities that analysts say call for consensus, said Santiago Pedraglio, a political analyst and member of a policy group, the Press and Society Institute, in Lima. Humala’s movement has 47 seats in the 130-member Congress, which means that he will have to seek an alliance with the Peru Possible party run by Alejandro Toledo, a former president.

Toledo, who lost to Humala and Fujimori in the first round of voting in April, was among a small group of influential figures in Peru’s establishment who threw their support behind Humala in Sunday’s second round. They warned that a victory by Fujimori would mean a revival of the corrupt 1990s-era regime led by her father, Alberto Fujimori, who is in prison.

The biggest show of support came from Mario Vargas Llosa, Peru’s Nobel Prize-winning author and a former presidential candidate who lost to Alberto Fujimori. Vargas Llosa, who was once opposed to Humala, says that his victory over Keiko Fujimori ensures that “democracy has been saved.”

Mirko Lauer, a columnist at La Republica, a Lima newspaper, said the backing of figures from the center-right, such as Vargas Llosa, may also have served to sway Humala toward a more moderate position.

Humala is expected to raise taxes on mining firms, but that is hardly radical in the region. The president-elect said the revenue the taxes would generate would be used to fund social programs. At the same time, he has also made advisers of technocrats who are well regarded by business interests.

“I think he will work to name a moderate cabinet, with serious people on economic issues,” said Torres, the pollster.

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