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Governing Peru in the Time of Party Collapse

By: Wilda Escarfuller - Aug 23, 2013, 12:02 pm

Part I

humala—peruAnother Peruvian president faces evaporating public support, a fractious opposition and civil unrest in the interior. This time it’s President Ollanta Humala (pictured), a former military officer who in his second run for office in 2011 presented himself as a moderate, pro-business social democrat—a contrast to his first run in 2006, in which he was all populist fire and brimstone.

Sadly, though, despite his 2011 makeover as a moderate—though still an outsider—the same fate has befallen Humala as has met Peruvian presidents since the election of Alberto Fujimori in 1989. In the post-Fujimori political dystopia, the fickle nature of party alliances and popular support has weakened the executive’s capacity to initiate and implement consensus over major policies. Add to that the disparity between Peru’s torrid rates of economic growth and the country’s levels of social and economic exclusion, and you have a prescription for political volatility and polarization. The question is whether this time it will lead to broader political and social upheaval.

It is now only two years into Humala’s five-year term and things are already looking pretty grim. According to recent polls by the firm Ipsos Peru, Humala’s popular approval rating is currently at only 33 percent, a decline of 20 points since April. And the president is facing defections from his government, with more than 26 ministers or high-level officials having resigned since Humala was inaugurated. At the same time, Humala’s party in the unicameral national legislature, the Congreso Nacional del Peru (National Congress of Peru), is already showing signs of splintering.

In the background to this political fracturing is the persistent boil of social conflict. Last year, the government’s Human Rights Ombudsman’s office reported that there were at least 149 conflicts in Peru’s rural areas, reflecting a 548 percent increase since 2007, many of them in indigenous communities, over extractive industries.

News reports have focused on this as the dilemma of a progressive, pro-business president governing in a poor country. It’s not that simple.

Rather, Humala’s struggles stem from the difficulties of governing in a post-partisan country where politics has become a blood sport. Institutional checks and balances remain weakened, inviting overreach. And the capacity of the state to deliver social programs has not caught up with the riches floating around the economy from international investment and natural resource extraction—and the popular expectations that has come with them—and newfound consumerism.

This state of affairs is not entirely new. Since the end of the Fujimori era, Peruvian presidents have had to confront the hyper-volatility of Peruvian public opinion. President Alejandro Toledo—who replaced Fujimori after the Japanese-Peruvian executive unexpectedly faxed in his resignation from Japan after a series of corruption scandals—ended his constitutional mandate in 2000 with his popular approval in urban areas hovering at 8 percent.

Toledo’s ignominious final days were a surprise, coming as they did after 10 years of Fujimori’s autocratic, brutal and corrupt regime, and with Toledo’s term in office accompanied by the steady trickle of revelations of just how corrupt and amoral the Fujimori government had been. In contrast to the Fujimori era, economic growth averaged 6 percent during Toledo’s five years in government.

Toledo’s successor, Alan Garcia, fared no better. Though Garcia’s first term in power, from 1985 to 1990, ended in unmitigated disaster, 16 years later an older and chastened Garcia proved to be more temperate and a better steward of the country’s economy. During his second term, from 2006 to 2011, economic growth hummed along at an average of 7.2 percent per year, while in sharp contrast to his first turn at holding power, inflation remained in the single digits. In part because of these factors, and the economic groundwork set by his predecessor, poverty was reduced from 48 percent in 2006 to 27.8 percent in 2011, according to the Instituto Nacional de Estadistica e Informatica (National Statistics and Information Bureau).

And yet, despite these factors, Garcia finished his term at only 42 percent in popular support.

As Toledo and Garcia can attest, maintaining the support of the Peruvian public is not an easy tightrope to walk—especially when political parties are the interlocutors. Both presidents managed, though it took effort. The question this time is whether the Peruvian public’s demands and structures for expressing them have become too fractured, the debate too unconstructive and politics too fluid and poisonous. Moreover, in contrast to the last two embattled presidents, Humala’s troubles have started much earlier. Humala now risks becoming boxed in by his anti-system, progressive image and the expectations that image raised—though with little broad structural popular support in favor of his policies. Meanwhile, the government’s support in congress continues to dissipate.

Can Humala recover?

Part II

Two years into a five-year term, the government of Peruvian President Ollanta Humala is already facing plummeting public approval. Despite Humala’s rhetorical commitment to social inclusion and justice, his government’s reaction to escalating protests against extractive industries has sparked concerns not only about his willingness to forge a consensus between local communities and international investors, but also about his seemingly weakening commitment to establish a predictable, just policy framework for disputes between them. The effect has been to leave the broader environment surrounding investment and community relations unresolved and unpredictable.

The government’s decision to crack down on protesters over the Newmont Corporation’s plans to expand activity in its gold mine, Conga, prompted the resignation of Vice Minister of the Environment Jose de Echave, Minister of Mines and Energy Carlos Herrera Descalzi, and Environment Minister Ricardo Giesecke. Later, a narrow interpretation of the country’s “consulta previa” or prior consent laws—which require that indigenous communities be consulted when activities may affect their culture or rights—as applying only to indigenous groups in the north led both Minister of Cultural Affairs Luis Peirano Falconi and Sub-Minister for Cultural Affairs Ivan Kriss Lanegra Quispe to resign in protest. Clearly, consulta previa hasn’t been a management technique among Humala’s own team.

While the trend of government decisions appears to favor private investors, both domestic and international, there is no articulated policy framework or consensus in the government for how to set the credible, enforceable, and objective terms for growing protests and movements against investment. As the protests escalate in number and intensity, it will become more difficult to roll back the escalating demands and tamp them down into a more confined, pragmatic, consensus-based approach.

Recently, more localized protests were overshadowed by national demonstrations that swept the country from July 26 to July 28 against Humala’s efforts to consolidate control over the judiciary on July 17. Congress appointed six new judges to the country’s highest court, plus an ombudsman, and filled three vacant slots on the central bank’s board as part of a clandestine agreement caught on audiotape among five political parties. The effort ran roughshod over the institutional processes established for filling the positions and reminded many of Fujimori’s piece-by-piece dismantling of the country’s legal and judicial system, and the corruption that followed.

In response, an estimated 4,000 people poured into the streets of Peru’s major cities to express broad-based public outcry at the executive overreach. It worked. Government officials rescinded their positions and congress annulled the appointments in response.

Most recently, three left-wing legislators defected from Humala’s Gana Peru party—Javier Diez Canseco, Veronika Mendoza and Rosa Mavila—due to a brewing dispute over the administration’s handling of opposition to mining projects and its shift toward the political center-right. The seats lost brought the Gana Peru party to a mere 43 deputies out of a total of 130 in Congress. That alone wouldn’t present a problem, but the rest of the Peruvian Congress comprises more than six parties, hardly a legislative makeup conducive to loyal opposition. Although Gana Peru continues to be the country’s strongest parliamentary force, the ruling coalition has only six legislators more than Fuerza 2011, currently at 37 members—and further defections always seem just around the corner.

The question will be whether Gana Peru and the government can define a consensus policy agenda with such low popularity and divisiveness and amid rising social conflict. To ensure the best outcome, there are several fronts that this government will need to move on to both seek a middle road on local protests but also reassure Peruvian society that the government is committed to the integrity of institutions and the rule of law.

First, the Humala government needs to articulate a clear, predictable and transparent policy for how the government will deal with the mounting conflicts between communities and natural resource extraction investors. This involves, though, more than just prior consent—it requires a form of “continuous consent,” in which the Peruvian government has the means to enforce agreements and ensure oversight of the ongoing relations between investors and communities.

Second, the government needs to reassure the country’s civil society and the international community that it respects institutions and the rule of law. One clear way would be to address contentious issues quickly, transparently, and objectively. Local governments lack effective leadership skills, and budget proposals often do not account for oversight of their practices. All too often there is grave mismanagement of mining revenues, which are passed directly to municipal governments and arrive, in amounts that are nearly impossible to allocate reasonably, in the coffers of local governments that are poorly prepared to manage how they can be spent. In fact, many of the municipalities fail to invest their full annual allocation. And when they do, the funds often end up in a number of silly projects, from bullfighting rings to an Olympic-sized pool that is still unfilled and an endless parade of new shiny and often tacky municipal government buildings.

Humala’s plans to address this, unfortunately, remain vague. The president would benefit if he were to seek best practices from opposing parties and members of civil society and private business with the idea of building a clear, balanced framework of proposals. But given the fluid party system, it would be no easy task to get broad political buy-in and get it approved in the country’s fractious Congress.

Is further upheaval in the cards? It depends on the Peruvian government and the willingness of community groups, human rights organizations, and private sector actors to sit down and agree to a common framework for the basics: investment, property rights, consultation, and assurances that contracts will be met. If Humala can demonstrate that he has the public’s best interest in mind and stands firm in his commitment that “economic growth and social inclusion will march together,” he might be the first post-Fujimori head of state to gain the public’s trust, change the political climate in Peru, and alter the recent pattern of presidents ending their terms under a cloud of popular disapproval.

These articles first appeared in World Politics Review, and we republish them with permission.

Christopher Sabatini, coauthor of this article, is editor-in-chief of Americas Quarterly and senior director of policy at the Americas Society/Council of the Americas. Follow him on Twitter on @ChrisSabatini.