Another Chavez or Another Fujimori for Peru?

On June 5, voters in Peru will decide a presidential election that is being watched increasingly by the world.  There is little question that the outcome of the heated contest between retired Col. Ollanta Humala, an ally of Venezuela’s Marxist strongman Hugo Chavez, and Congresswoman Keiko Fujimori, daughter of Peru’s imprisoned former President Alberto Fujimori, will have an impact far outside the borders of the country—and especially in the U.S.

In the last poll taken before the only televised debate between the candidates May 29, the 36-year-old Fujimori held a slim (50.5% to 49.5%) lead among likely voters over Humala, who led an unsuccessful coup against her father’s regime in 2000 (and whose brother Antauro is in jail for leading another attempted coup in 2006, this one against moderate President Alejandro Toledo). 

Americans should care about the result of the contest between Humala and Fujimori.  Peru has become a major Latin American trading partner with the U.S.  Under the U.S.-Peru Trade Promotion Agreement of 2009, one of the last measures signed into law by George W. Bush in his presidency, American tariffs on Peruvian goods were eliminated and the customs clearance process of Peruvian goods coming into the U.S. was accelerated.  In large part, this agreement has been a key factor in Peru’s 7.2% average annual economic growth over the last five years—the fastest growth of any Latin American nation.

The 48-year-old Humala favors renegotiating the free-trade agreement with the U.S. and has called for higher royalty fees on gas and mining production.  (Peru “has commitments for more than $40 billion of new foreign investment in mining alone,” noted Gideon Rachma in the Financial Times.)

So it is no surprise then that, with the elimination of three centrist candidates with close ties to the business community in the initial balloting in April, Peruvian business is very nervous about a Humala victory June 5.  As uncomfortable as they might be with another “President Fujimori” (the elder Fujimori is now serving a 25-year sentence for corruption), many business leaders will, as one Latin American observer put it, “hold their noses and vote for Keiko.”

There are other deep concerns among Peruvians and Americans about the impact of a “President Humala.”  At a time when Peru is the world’s top exporter of cocaine, would Humala be an ally or an impediment to the U.S. effort to fight narcotics trafficking in the hemisphere? 

And Humala has vowed numerous times to scrap the Peruvian constitution in favor of one that gives the government a greater hand in the economy.  Rewriting the constitution to enhance government power has been a tactic practiced by all of the leftist, U.S.-hostile strongmen in Latin America —Morales of Bolivia, Correa of Ecuador and Chavez of Venezuela.

“It’s Not About Keiko—It’s About Daddy-O!”

Having described the choice between Humala and Fujimori as one between “terminal cancer and AIDS,” Peruvian novelist and Nobel Laureate Mario Vargas Llosa recently made headlines when he endorsed the leftist candidate in the runoff.

As disappointing as this was to admirers of Vargas Llosa—a favorite of conservatives and a voice for free-market economics—Peru-watchers explained that the author’s animosity toward Keiko Fujimori comes from losing the presidential race to her father back in 1990 (which Vargas Llosa recounted in his book A Fish in the Water).  “It’s not about Keiko—It’s about Daddy-O!” concluded a U.S. expert on Latin American politics. 

Possibly the most fascinating part of  the race in Peru is that both contenders have taken pains to distance themselves from the more famous politicians with whom they have been closely linked.

Humala, for example, has toned down the fiery rhetoric of his ’06 race (in which he narrowly lost to outgoing President Alan Garcia) and has swapped his signature red T-shirts for dress-for-success business suits and ties.  In contrast to ’06, he doesn’t mention Hugo Chavez on the campaign trail and insists he is more in the mold of Brazil’s popular center-left former President Luiz Inacio Lula da Silva.

While vowing to maintain the constitution that her father promulgated in 1993 and taking a hard line on rising crime, Keiko Fujimori has backed away from earlier vows to pardon her father from prison if elected.  During the debate on Sunday, the congresswoman scored points following Humala’s denunciation of her father’s regime when she responded:  “I am the candidate, not Alberto Fujimori.  If you want to debate with me, confront my ideas.  If you want to debate with Alberto Fujimori, you can go to the diroes [prison].  I will make the decisions if I am elected president of Peru.”

 Whether this debate changed any minds is uncertain.  What is certain is that whatever the outcome in Peru, the world and the markets will be watching and reacting on the morning of June 6.