Peru politics

Peru’s elections of mayors and regional governors on Sunday were a strange sight.

In Lima, the capital, the second place finisher – 30 points behind the winner – was feted like a victor. Meanwhile the anti-mining regional governor of mineral-rich Cajamarca – with the highest total out of 25 races – had little to celebrate. 

Jara in

The revolving doors of Peru’s cabinet are spinning out of control. Ollanta Humala, the president, this week named his sixth cabinet chief in less than three years, complicating an already difficult stretch for the government. 

By Lucien Chauvin and Andres Schipani

Ollanta Humala, Peru’s president, is in a tough spot. The country faces its most serious constitutional crisis in more than a decade on Monday, if lawmakers reject his cabinet in a vote of no confidence.

The crisis revolves not around government policy or the performance of Humala’s cabinet, but around the role of his wife, First Lady Nadine Heredia. 

Not for no good reason did the Beatles sing: “Cause I’m the taxman, yeah, I’m the taxman.” And it looks like the Peruvian government took that seriously. Peru’s tax agency has been saying Spain’s Telefónica, the largest telecom operator in the Andean country, owes over $850m in taxes and accumulated interest from 2000 and 2001.

However, on Monday, after almost a year and a half of negotiations the Peruvian government said it would renew Telefónica’s operating license in the Andean country for another 18 years and ten months. Good timing too: it’s just a few days before the visit of Spain’s Prime Minister Mariano Rajoy. 

Even during thunderstorms and floods, the Incas believed the ancient sun god, or Inti, was always shining. In today’s Peru bloody and protracted protests have stopped mining projects from going ahead – such as Newmont Mining’s $5bn Conga project.

They have also forced the country’s President, Ollanta Humala, to make cabinet changes. But the investment climate in Latin America’s fastest-growing economy seems to be, somehow, shining. 

Peru’s president Ollanta Humala has thumbed his nose at the leftists who helped sweep him to power this week with a cabinet reshuffle and a crackdown on protestors opposing the $4.8bn Conga gold and copper mine.

The former lieutenant-colonel, who once called Venezuela’s radical leftist president Hugo Chavez a close ally, has put his old army training officer in the prime minister’s chair.

Investors have reacted positively to the changes, but what really matters is whether Humala can tackle social protests – one of the biggest investor risks in Peru – any better than his predecessor, Alan García. 

Fickle but powerful things, markets. Investors know that. So too do struggling western governments. Now it’s the turn of Peruvian president Ollanta Humala – the former coup leader and Hugo Chávez admirer who has now turned (apparently) into a middle of the road centrist in the mould of Brazil’s former president, Luiz Inácio Lula da Silva.

It was only a handful of months ago that markets were freaking out at the prospect he might become president. Yet now that Humala is installed in the presidential palace, they’re not so worried and have decided that they’re open for business after all. On Tuesday, the government returned to local debt markets for the first time in five months with a PEN300m (US$110m) 2-year bond. The issue had six times more bidders than was available. 

The only Latin American heads of state missing at Ollanta Humala’s inauguration as president of Peru on Thursday were Venezuela’s Hugo Chavez, Paraguay’s Fernando Lugo, and … Humala’s predecessor Alan Garcia.

Chavez and Lugo have both been fighting public battles with cancer, but Garcia had another reason for the snub – he didn’t want a replay of 1990, the last time he left government.