Tags: Analysis: New Peruvian Leader Causes Uncertainty

Analysis: New Peruvian Leader Causes Uncertainty

Tuesday, 02 Aug 2011 07:48 AM


Newly-elected President Ollanta Humala promised to end poverty and social exclusion during his inauguration, but lack of specific plans or discussion of popular campaign promises is undercutting his support and raising questions on both the right and the left.

Retired Lieutenant Colonel Ollanta Humala was inaugurated on July 29th after his narrow electoral victory in June. The center-left Humala stirred controversy by swearing to rule in the spirit of the 1973 constitution, ignoring the more recent 1993 constitution. In his speech, Humala promised to fight poverty, spread economic prosperity to the poor, and eliminate social exclusion. The only specific information he mentioned is a plan to expand a cash transfer anti-poverty program. Humala did not discuss implementing a tax on the mining companies or reparation for victims of counterinsurgency operations during the civil war, both of which were important parts of his campaign platform.

Analysis

Since his election in June, Humala has moved to please both the investment community and his supporters, but he has failed to win over either. Investors are cautiously optimistic thanks to conservative cabinet appointments, including naming economist Miguel Castilla as Finance Minister. However, until Humala implements an actual economic program, investors will remain skeptical.

With only 47 of the 130 seats in congress, Humala needs popular support to succeed, but his backers are unhappy with his performance to date. Lack of specific plans to help the poor or definite steps to implement campaign promises have already cost Humala support; his popularity ratings dropped to 40% from 70% over the last month. Humala’s campaign raised expectations to likely unattainable levels, setting him up for failure among his constituents. If popularity numbers continue to fall, Humala may ratchet up populist promises and programs to win them back, undercutting his hard-won acceptance by investors. Peru has been plagued by social protests and strikes, and increased demonstrations and protests would seriously undermine the government. Moreover, if Humala fails to meet at least some of the needs of the poor -- who see him as their champion -- they could even refuel the severely faltering rebel Sendero Luminoso group that has drawn from the indigenous poor for support in the past.
Lisa M. Ruth is a former CIA analyst and officer. She is currently Managing Partner of C2 Research, a boutique research and analysis firm in West Palm Beach, Florida and is Vice President at CTC International Group, Inc., a private intelligence firm.


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Analysis: New Peruvian Leader Causes Uncertainty
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2011-48-02
Tuesday, 02 Aug 2011 07:48 AM
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