Peru May Join Latin America’s Populist Tilt to Left

A populist movement is gathering momentum in Latin America. Moderate socialist candidate Michelle Bachelet has just been elected as the first female president of Chile. More radical Peruvian presidential candidate Ollanta Humala’s support has also been rising rapidly in recent polls. Humala is a left-wing politician who, if elected in early April, would likely wrestle with free trade and free-market policies. He appeals to those in Peruvian society who have not benefited from recent economic growth and describes globalization as a US attack on the impoverished. Peruvian government officials suspect that he has received financial support from Venezuela’s Hugo Chavez and some analysts foresee the possible ascension of an Andean “troika” - Chavez, Humala and Bolivian president Evo Morales - that could push the region in a far-left direction with increased hostility for the Bush administration. In countries like Chile, Brazil and Uruguay, left-leaning leaders still govern from the center, but if Peru elects Humala, Latin America could start pursuing a more radical agenda. - YaleGlobal

Peru May Join Latin America’s Populist Tilt to Left

David Luhnow
Wednesday, January 18, 2006

In the latest sign of the populist wave coursing through Latin America, presidential candidate Ollanta Humala, a left-wing opponent of free trade and free-market policies, has surged to the top of the polls ahead of Peru's election in April, prompting fears that the region's commitment to market-based reforms is waning.

The former army officer's rapid rise reflects the emergence of a more radical and populist left in Latin America, particularly in the impoverished Andean region, which forms an arc stretching from Venezuela at the top of South America to Peru in the west. Mr. Humala, who led a short-lived coup against a democratically elected leader in 2000, has the vocal backing of Venezuelan President Hugo Chávez, who has cultivated close ties with Cuban dictator Fidel Castro.

Like Mr. Chávez and Evo Morales, a former coca-leaf grower who won the presidency of Bolivia in December, Mr. Humala has campaigned on a promise to increase state control over the economy's key mining and oil sectors. And like his counterparts in Caracas and La Paz, Mr. Humala condemns globalization as a U.S.-led assault on the poor.

Coming On Strong

Since 2000, the left has done well in Latin America, helped by the popular perception that free-market reforms aren't helping the poor, by corruption among traditional political elites, and by an unpopular U.S. foreign policy. Leftists who have won power in places like Chile, Brazil and Uruguay have largely governed from the center, controlling public spending and keeping their economies open to trade. Yesterday, Chile's moderate Socialist party, whose policies include the mandatory study of English in public schools, won a second consecutive victory with the election of the country's first female president, Michelle Bachelet.

But the possible rise of an Andean "troika" -- Messrs. Chávez, Morales and Humala -- mentored from afar by Cuba's Mr. Castro, has raised concern about how far to the left the region as a whole could drift, especially in a year loaded with contested elections. On the U.S. doorstep in Mexico, meanwhile, former Mexico City mayor Andres Manuel Lopez Obrador leads the polls ahead of July's presidential election on a populist platform, although he has tried to distance himself from Mr. Chávez. Argentine President Nestor Kirchner, who has a strong populist streak, recently turned more leftward by dismissing his market-minded finance minister. And in Brazil, leftist President Luíz Inácio Lula da Silva is trying to win re-election.

The populist wave is another headache for the Bush administration, which has been widely criticized in the region for ignoring Latin America. Mr. Morales has followed Mr. Chávez in attacking President Bush as a "terrorist," for instance, and Mr. Humala has spoken out against U.S. "domination." But the White House so far hasn't responded in kind, reiterating its support for free elections even if it doesn't like the results.

The U.S. remains a major source of aid for Andean nations and has great influence in the International Monetary Fund and World Bank, which are major creditors of the region. By stressing aid and support for democracy, the U.S. hopes to limit the influence of Mr. Chávez, Washington's main regional rival.

Although Peru's economy has grown rapidly in the past few years, Mr. Humala has been able to seize on the discontent of the poor, especially the region's marginalized Indian groups, who have benefited only slightly from the growth and are impatient for faster results. A national survey released yesterday by Peru's leading pollster, Apoyo Opinion & Mercado SA, showed Mr. Humala leading in the presidential race for the first time, with 28% support, compared with 25% for the second-place candidate, center-right former congresswoman Lourdes Flores. Mr. Humala's rise has been meteoric. He had just 8% support in Apoyo's October poll, compared with 27% for Ms. Flores.

The surge in support for Mr. Humala, who vows to call a national referendum on a free-trade deal signed in December between Peru and the U.S., has rattled Peru's financial markets. Stock prices have fallen steadily during the past months, and weakness in the country's currency, the sol, prompted Peru's Central Reserve Bank to intervene to support it every day last week, selling a total of $292.5 million in the foreign-exchange market.

In a note to clients last week, investment bank Bear Stearns Cos. warned that political trends in Latin America could hurt overseas investors who have poured billions of dollars into stocks and bonds in the past year, sending stock prices to highs in some places, such as Mexico. The bank recommended that investors cut their exposure to the region. Other analysts say a pragmatic left will continue to dominate the landscape, especially since most leaders will have to rely on outside investment, debt or taxes to generate funding for their social programs, unlike Mr. Chávez, who has the advantage of Venezuela's oil wealth.

At the least, a Humala victory could make life tough for multinational companies. Mr. Humala wants to boost taxes and royalties on foreign mining operations and claim at least a 49% share for the government in Peru's giant Camisea natural-gas fields, which are now run by a consortium including Spain's Repsol YPF SA and Hunt Oil Co. of Dallas. He has also talked about greater state control over the mining sector.

From Mr. Chávez's perch atop the world's fifth-biggest oil exporter, his influence has grown enormously. Since winning election in 1998, the former paratrooper has cast himself as a defender of Venezuela's sovereignty by tearing up contracts with major Western oil companies, such as Chevron Corp. and Royal Dutch Shell PLC, and forcing them to accept greater state control and pay higher royalties and taxes on their Venezuelan projects. He has used the money to fund a lavish social spending program at home and to offer cut-rate oil to dozens of Latin nations. Although economists warn Venezuela will be in trouble if the price of oil falls, Mr. Chávez's 70% approval ratings haven't discouraged other politicians from following his lead.

Bolivia's president-elect, Mr. Morales, took a page from Mr. Chávez's book in winning December's national election, promising to protect the country's natural-gas resources from outside interests. How that will translate into action remains to be seen, but at the very least it appears he will favor state-run energy companies over Western companies in handing out contracts.

Mr. Humala's career so far resembles that of Mr. Chávez. Mr. Humala and his brother Antauro, a former army major, led some 70 followers in a short-lived military rebellion in October 2000, a month before Peruvian President Alberto Fujimori's 10-year regime ended in a corruption scandal. Congress later pardoned Mr. Humala. Likewise, Mr. Chávez's failed coup in 1992 made him a national figure who was jailed briefly before going on to win the presidency.

Mr. Humala turned up as a surprise guest earlier this month when Mr. Morales visited Mr. Chávez in Caracas. At the meeting, Mr. Chávez openly backed Mr. Humala, angering outgoing Peruvian President Alejandro Toledo, who accused the Venezuelan leader of meddling in Peruvian politics and using his oil money to destabilize the region.

Some Peruvians worry that Mr. Humala could make Mr. Chávez seem like a moderate. Of greatest concern is his family. His brother Antauro is in jail after leading another bloody rebellion against the government last year, and his father, Isaac, is the founder of a movement that touts the superiority of the "copper colored" race -- the country's Indian or mixed-blood majority. Ollanta Humala has distanced himself from his father, but has advocated some of his views, including building up Peru's armed forces.

Peruvian government officials say Mr. Humala's campaign war chest is being secretly funded by Venezuela's Mr. Chávez, through diplomatic channels. One official said "over $1 million" has come into Mr. Humala's coffers through the Venezuelan Embassy. Mr. Humala has publicly denied receiving financial support from Mr. Chávez.

If no candidate wins a majority in the April 9 vote, which is likely, the country would hold a run-off between the top two. The Apoyo poll showed Ms. Flores still has an edge in voter intentions for the second round, leading Mr. Humala by 46% to 39%. But that lead has narrowed quickly. In December, Ms. Flores had a 50%-to-35% lead over her rival, and analysts said Mr. Humala's quick rise makes him the current favorite to win the second round.

The race seems to be coming down to a choice between continuity and change. Ms. Flores promises to continue the country's impressive economic growth under Mr. Toledo, while Mr. Humala says the growth hasn't helped the poor quickly enough and vows to "refound" the country and constitution along more egalitarian lines.

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