Political Risk Latin America Blog @PolRiskLatam

Peru politics: Humala victorious

Posted in News and Articles, Political Risk by politicalrisklatam on June 7, 2011

by The Economist Intelligent Unit, June 6th, 2011.

Peruvians had to choose between two extremes in the second-round presidential election on June 5th, and handed the victory to radical nationalist Ollanta Humala, of Gana Perú, over conservative Keiko Fujimori. After both candidates strived to moderate their images in the campaign leading to the run-off, more voters apparently believed that Mr Humala could distance himself from his past. Still, financial markets are expected to react with great nervousness to the outcome in the days ahead, given fears that Mr Humala will veer away from the market-oriented policies of the last two decades. 

The electoral race was in a technical tie for weeks prior to the vote, although many analysts, including the Economist Intelligence Unit, believed that Ms Fujimori, of Fuerza 2011, would eke out a narrow win by attracting the more centrist urban voters, particularly in the capital city of Lima. However, in the last days of the campaign it became clear that Ms Fujimori was unable to distance herself from the negative aspects associated with the regime of her father, Alberto Fujimori (1990-2000)—including massive corruption scandals and human-rights abuses, for which he is serving a 25-year prison term. As a result, Mr Humala managed to win by a small margin, helped by his support base in rural areas and in the provinces. With 87% of ballots counted, Mr Humala had 51.2% of the vote, against Ms Fujimori’s 48.8%

Ismael Benavides, the finance minister of the outgoing government of President Alan García, said prior to the vote count that the administration had a contingency plan ready to put in place to prevent the electoral outcome from engendering major volatility in currency and financial markets. Nonetheless, the markets are expected to respond with concern, at least until Mr Humala moves to calm their fears, not only with words but with action, namely by appointing technocratic and moderate ministers in his cabinet, especially to economic policymaking posts. Mr Humala can be expected to do so in the days ahead. (continue reading… )



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