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With a huge cowboy hat and a giant yellow pencil — the symbol of his political party — Pedro Castillo has carved out a popular, colorful figure as he travels throughout Peru campaigning for the presidency.
But between Lima’s business elite and the boardrooms of mining companies that generate much of Peru’s wealth, no one is amused.
Castillo, a 51-year-old schoolteacher and union leader, emerged from the political darkness to win the first round of last month’s election with a shameless Marxist ticket.
His party, Peru Libre, wants nothing less than a revolution in Latin America’s fifth most populous nation, with the goal of overthrowing the free market model that has ruled the country for a generation.
In its manifesto, the party says foreign mining companies should be forced to pay 80% of their profits to the state instead of the “miserable” 10, 20 or 30% they pay now.
“If companies do not accept the new conditions. . . the state must proceed with nationalization “, warns Peru Libre.
The party’s founder, Vladimir Cerrón, names Venezuelans Hugo Chávez and Nicolás Maduro, Nicaraguans Daniel Ortega y Fidel and Raúl Castro in Cuba from a select “group of presidents who gave dignity to the continent.”
“The program is a return to the 1970s,” said Roxana Barrantes, a professor of economics at the Pontifical Catholic University of Lima. “You’ve read it and you think ‘My God, what’s this ?!’
Financial markets are surprisingly surprised, not only by Castillo’s wide victory in the first round, but by subsequent polls suggesting he enjoys a dominant advantage over his rival in next month’s second ballot, Keiko Fujimori, daughter of the former authoritarian president of the country. Alberto Fujimori.
In the two weeks following the first vote on April 11, Peru’s currency, the sun, fell more than 4 percent and hit an all-time low of $ 3.85 on the dollar, while the stock market went fall more than 12 percent. The difference between ten-year sovereign bonds and U.S. Treasuries widened by more than 71 basis points and the cost of ensuring delinquency prevention, with five-year delinquency swaps reaching their highest level. high this year after the first round.
One recent business survey they found that three-quarters of Peruvian companies have suspended their investment plans until after the June 6 elections.
“We don’t have information on capital flight yet, but all the anecdotal evidence suggests that people are looking to take their money,” said Alonso Segura, a former finance minister.
“I have friends who are wealth managers and are inundated with work, opening bank accounts for people in Panama and the United States. It’s hard to know how representative and representative he is, but it’s certainly happening. “
Keiko Fujimori challenged presidency leader Pedro Castillo to impromptu debate © Francisco Vigo / Reuters
It is unclear to what extent Castillo believes in the radical manifesto of Peru Libre, which also calls for a new constitution drafted by a popular assembly and a reassessment of the country’s free trade agreements.
Perhaps distrustful of wasting his leadership, he has given few interviews and baffled the idea of presidential debates.
Knowing he has to go on the offensive, Fujimori traveled last weekend to the northern Peruvian city of Chota, where Castillo has his electoral base. There, he challenged him to an impromptu debate on a stage in the town square.
True to his party’s manifesto, Castillo addressed foreign multinationals that he said they have “looted the country.”
“Gold, silver and zinc should be for Peruvians,” he said. “It’s time to choose a man from the village. There are no more poor people in a rich country! ”
For those concerned about a Castillo presidency, there is consolation in the mathematics of Peru’s fractured political landscape. At the next congress, Peru Libre will be the largest party with only 37 of 130 seats.
Even with the support of other leftists, he will fight to garner a third of the parliamentary votes Castillo would need to avoid impeachment, let alone the two-thirds he would need to change the constitution.
“Look at their proposals. They cannot be implemented unless there is absolute control of the congress, “said Alfredo Thorne, a former finance minister. He said major mining companies would simply leave if Peru turned sharply to the left.
“With the price of copper where it is, most mines around the world are profitable. You don’t have to be in Peru to exploit copper ”.
With a month to go, Fujimori still has a chance of victory, although she still follows about 10 percentage points and is hated by many Peruvians, who relate it to her father’s divisive rule in the 1990s and his own obstructionism as a congressman in recent times. years.
More than two-thirds of the electorate did not vote for either of the two candidates in the first round. 10-18% say they don’t know who to lean on in the second and up to a quarter say they will spoil their ballots.
“The problem with Castillo’s second round against Fujimori is that so many voters consider both candidates to be fundamentally unpleasant,” political consultant Teneo said.
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