Peruvians look beyond row to economic crunch

As Peruvian President Martin Vizcarra navigates the political storm gripping his country, many in the Andean nation worry that an economic rebound could stall and infrastructure development come to a grinding halt.

On Sept 30, Peru started with one president and finished with another, only to change back the next day. Vizcarra has since sworn in 19 new ministers in a government reshuffle, and has announced new legislative elections for Jan 26.

For now, a constitutional crisis appears to have been averted, but many citizens are unsure what will happen next. In a country that goes through political crises with clockwork regularity, this may yet be the biggest in 30 years.

“In recent months the government has not been able to carry out many things. The mining projects have stopped and the economy is growing very slowly, and in a certain way this impacts Peruvian industry,” said David Cornejo, a public relations executive in Lima.

When the president announced on Sept 30 that he would dissolve the country’s parliament, his goal was to force a change in Congress.

Minutes later, Peru’s Congress pulled off a surprise of its own. Congress used a constitutional provision to suspend Vizcarra from power and Mercedes Araoz, the country’s second vice-president, was sworn in as president. But she quit as both vice-president and interim president less than 24 hours later.

Pedro Olaechea, who leads Congress, was having a television interview when he learned that Araoz had resigned.

Vizcarra, who himself was first vice-president until the then president Pedro Pablo Kuczynski quit last year over a corruption scandal, has the backing of the military and most governors and has remained in power, albeit in a sort of legal limbo. His latest dispute with Congress was related to a change in how judges are appointed to the country’s highest court.

The political turmoil created widespread fears that an economic and financial crisis would soon follow, with prices rising rapidly and jobs getting hit.

“An expectation was created at the time, because of the political facts. How the economy was going to be hit, how the food prices were going to be hit. There was some fear, but we have seen that things have developed very well and support is maintained for what President Vizcarra did. There is not much fear. Prices have not risen and the currency remains stable. People are calm. They want to see what happens next,” said Cornejo.

All living Peruvian former presidents are facing some kind of criminal charge; some are in jail and one is a fugitive living in the United States. Another, Alan Garcia, killed himself during an attempted arrest last year.

Vizcarra tapped into the concerns related to corruption by pointing to members of Congress, who enjoy immunity from prosecution.

In the latest data available, Peru’s economy grew 3.28 percent in July from the same month a year earlier. But the country’s central bank is now anticipating cutting its growth projections for this year, citing a slower-than-expected recovery. A central bank survey of economists in August found respondents factor in 2.5 percent growth this year, down from earlier expectations 2.9 percent. This slowdown could be exacerbated by any kind of prolonged political crisis.

Following the dissolution of Congress, the government has to call new elections, which should be held in January. Any new members will be in office for only 18 months and Vizcarra is expected to win a majority.