Peru’s elite in panic at prospect of hard-left victory in presidential election

Ravaged by one of the world’s worst coronavirus outbreaks, wracked by political turmoil, scarred by corruption scandals and blighted by worsening poverty, Peru will choose its fourth president in under a year on June 6.

Described by many observers as a choice between the lesser of two evils, the second-round run-off election pits Pedro Castillo, a rural primary school teacher turned hard-left populist, against Keiko Fujimori, the widely disliked scion of an authoritarian president who ruled in the 1990s.

Panic has seized the Peruvian elite at the prospect of a win by Castillo, whose political party Free Peru is led by a Marxist advocating widespread nationalisation, higher taxes, a new “people’s constitution” and import substitution policies in the world’s number two copper producer.

“Would you like to live in Cuba or Venezuela?” ask electronic billboards along a main highway in Lima, in a reference to Castillo. The sol fell to a historic low of 3.85 to the dollar last Wednesday as wealthier Peruvians rushed to dump the national currency and move their savings abroad.

“I have not seen capital flight this bad here in two decades,” one leading business figure told the Financial Times.

The roots of Peru’s deep crisis go back years. Hailed as a success story by investors, not enough of its economic growth trickled down to the poor. Successive corruption scandals destroyed faith in the political and business classes and created chronic instability, which led to Peru having three presidents in just over a week last year. When coronavirus hit, the health service collapsed amid a shortage of beds and medical oxygen.

An FT analysis of excess death data shows that Peru has been by far the world’s worst-affected country, suffering more than double its normal death rate during the pandemic.

A strict lockdown last year plunged the economy into a deep recession but failed to curb the spread of the virus, fuelling indignation. Almost a third of Peruvians now live in poverty, according to official figures, an increase of 10 percentage points since the start of the pandemic.

Now, Peru’s downtrodden millions see in Castillo a ray of hope. Sporting a trademark white Stetson hat and waving a large inflatable yellow pencil symbolising education, “El Profe” has been firing up audiences across left-behind areas of Peru with a simple but powerful message: “No more poor people in a rich country.”

At a recent campaign event in Villa El Salvador, one of the teeming suburbs of modest cinder block homes that sprang up around Lima in recent decades, Castillo strode the stage denouncing the country’s rulers.

“The traditional political class are filling their pockets with the wealth of this beautiful land,” he bellowed. “Peru is an enormously rich country and its people are eating sand . . . We will give this country back to the people”.

Local residents cheered him on, waving flags and chanting in chorus, “Urgente, urgente, Pedro presidente”.

“It’s time to change everything around here,” said María Fernanda García, as she hawked snacks nearby. “We’ve had enough”.

The task of trying to stop Castillo has fallen to Fujimori, a conservative who was the runner-up in a chaotic first-round election with 18 candidates, none of whom proved popular. Castillo won with 18.9 per cent and Fujimori’s tally of 13.4 per cent was smaller than the number of blank and spoiled ballots.

Polling data showed that Fujimori had among the highest rejection rates of the first-round candidates. She was forced to abandon campaigning in the historic city of Cusco last week after being pelted with plastic bottles and rubbish by a hostile crowd.

Already tarnished by corruption allegations, her unpopularity is amplified by a record as a confrontational leader in a previous parliament and from past conflicts with her family.

Nonetheless, “the panic of the business class is such that they are endorsing Keiko without any conditions whatsoever”, a former government minister told the FT. “They are trying to justify the unjustifiable to get her elected.”

The latest opinion polls show a tight contest, with a wide early Castillo lead narrowing significantly but they failed to forecast Peru’s first round accurately and few people are making bets on the outcome.

Local journalists complain of heavy pressure from media owners to demonise Castillo and play up the idea that he represents a Marxist menace, something the candidate’s supporters say is untrue.

“Castillo’s is not the Cuban or Venezuelan model,” said Pedro Francke, a university economics professor who is advising him. “He is much more in the image of [former Bolivian president] Evo Morales.”

Assessment of what a Castillo government might be like is complicated by the candidate’s aversion to interviews and uncertainty over the role of Vladimir Cerrón, the Marxist leader of Castillo’s party. A former regional governor under investigation for corruption, Cerrón has been a shadowy figure throughout the campaign.

Optimists believe Castillo might soften his line in government, citing the example of Ollanta Humala, a leftist who governed more moderately when in power from 2011 to 2016. But in the campaign’s final stages “Castillo is not giving any signal of moderation”, said José Carlos Saavedra, chief economist at Apoyo, a consultancy. “On the contrary, he has radicalised.”

As the election draws near, Peru’s professional classes express the sinking feeling that neither candidate is remotely suited to tackling the country’s huge challenges.

“It’s a contest between failures,” lamented Alberto Vergara, a political analyst. “The one who fails the least will be the winner.”