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Peru crisis deepens-agreement on polls eludes lawmakers

Elections crucial for ending unrest in which dozens have died and economy has suffered.

An anti-government protester in Lima © Ernesto Benavides/AFP/Getty Images

Peru’s congress has been unable to set a date for early elections, deepening the political paralysis in the world’s second-biggest copper producer as widespread anti-government protests enter their third month.

The assembly’s failure to pass legislation before its closure would make it unlikely that elections can be held this year, analysts said. Congress is in session until February 17 after it was extended late on Friday, and could agree to schedule elections this year, but a consensus seems distant. Lawmakers from ousted leftwing president Pedro Castillo’s Peru Libre party have refused to support any changes that do not open the door to drafting a new constitution.

The elections are due in 2026 but President Dina Boluarte has urged congress to bring them forward and Prime Minister Alberto Otárola said at the beginning of the month that polls were the only way to restore “the peace and calm that the country needs”.

The unrest was triggered by the ousting and subsequent arrest of Castillo on December 7 after he attempted to close congress and rule by decree ahead of an impeachment vote. Boluarte, who served as his vice-president, was sworn in to replace him hours later.

Castillo, who is in detention awaiting trial on charges of “rebellion”, maintains strong support in Peru’s poorer rural areas, where many felt left behind as the wealth generated by mining after the country’s return to democracy in 2000 was concentrated in the cities.

Demonstrators seeking new elections and calling for Boluarte to resign have blocked highways, attacked mining infrastructure and invaded airports. A state of emergency is in place in swaths of the country, including the copper-rich southern provinces where the protests have been focused. Dozens have been killed in the crisis, with police reportedly firing live rounds.

Seventy-one per cent of Peruvians want congress to close and Boluarte to resign, triggering new elections, according to a poll published by Datum on Friday. Only 26 per cent want the president to stay on.

Peru lawmakers debate proposals to bring elections forward. They rejected multiple bills that would have scheduled polls for October this year © Jimena Rodriguez Romani/Bloomberg

Congress last week rejected multiple bills that would have scheduled presidential and congressional polls for October this year, with a new president sworn in in December.

Lawmakers from Castillo’s Peru Libre have long sought to amend the country’s constitution, which was enacted in 1993 during the authoritarian government of Alberto Fujimori.

Other lawmakers have been accused by protesters and analysts of acting solely to save their seats.

“Clearly elected congress people don’t have enough incentive to leave their positions,” said Denisse Rodríguez-Olivari, a policy leader fellow at the School of Transnational Governance at the European University Institute in Florence. Some lawmakers were hoping the protests would lose momentum as deliberations continued, she added.

Congress could still theoretically approve elections this year, but the challenges were formidable, analysts said. A majority of 87 votes in the 130-strong assembly would be required this week to advance any legislation. Alternatively, any proposal with a majority of 66 votes in favour could be put to a referendum. However, Peru’s fractured congress, which has 13 unruly voting blocs, makes both prospects unlikely.

“The hardest thing is getting congress to change its mind, and without that, elections this year are impossible,” said Rodolfo Rojas, a partner at Sequoia, a Lima-based consultancy. “Unless, of course, if Boluarte resigns.”

Under the constitution, if the president and then the vice-president are removed from office or resign, the president of congress replaces them and must immediately call elections.

The current crisis has long been brewing — Peru has had six presidents in five years. But it escalated in December after Castillo moved to close congress. Boluarte has failed to unite the country and has become a target for demonstrators’ anger.

If the unrest continues, the consequences for Peru’s economy, which doubled in size between 2001 and 2014, could be dire, analysts warn. The IMF on Thursday forecast slowing growth for 2023 and said the outlook for Peru was uncertain.

Several mines have been forced to temporarily suspend or reduce operations owing to roadblocks and attacks by protesters, putting nearly a third of Peru’s copper output — approximately 2.4mn tonnes a year, or about 11 per cent of the world’s mined total — at risk.

Agricultural exports have also been hit, with the country’s farming association estimating a loss in value of $300mn in the first two months of demonstrations.

Last week, rating agency Moody’s switched its outlook for Peru’s sovereign debt to negative from stable. It affirmed the country’s investment-grade rating but warned that growing instability threatened “a deterioration in institutional cohesion, governability, policy effectiveness and economic strength through successive governments”.

Peru’s crucial tourism sector has also been hit by international travel warnings and attacks by protesters on infrastructure. The Inca citadel Machu Picchu, which in 2021 received 450,000 visitors, was forced to close, while hotels in the nearby city of Cusco have faced mass cancellations. Restaurants that usually teem with international diners are shuttered.

“Everybody that comes to Peru goes to Machu Picchu,” said Marisol Mosquera, who runs Aracari, a luxury travel company. “Bookings have disappeared.”

Like other tourism businesses, Aracari was only just recovering from the Covid-19 outbreak when the political turmoil began. The pandemic forced the company to downsize from 27 staff to 12. Now it may face further cuts. “We hope things calm down soon,” Mosquera said.

Copyright The Financial Times Limited 2023. All rights reserved.


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