Monday, November 24, 2014
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Ollanta Humala’s Limited Options

BUENOS AIRES – The big question in Latin America today is this: Will Peru’s newly elected president, Ollanta Humala, orient his country toward Venezuela’s Hugo Chávez and his radical allies? Or will he choose the path taken by Brazil’s former president Luiz Inácio Lula da Silva and the region’s other moderate politicians?

Humala’s own ambiguous words offer little guidance. So the direction in which he intends to lead must be read from his actions, and these are unlikely to be definitive in the short term. Peru’s domestic and international situation, however, will frame his main decisions.

Humala is no novice politician rising to victory on charm and luck. In the presidential election of June 2006, he received 45.5 % of the vote – not enough to defeat Alan García, but sufficient to show how deeply he had tapped into the hopes and trust of many Peruvians. At that time, populism seemed an unstoppable force in Latin America. Fueled by an oil boom and vast social spending, Chávez was flying high, blessed and supported by the aging but still active Fidel Castro.

Across the región, Chávez’s influence was strong. His backing was a decisive influence in the election of Bolivia’s President Evo Morales in 2006, and the following year he supported Daniel Ortega in Nicaragua and Rafael Correa in Ecuador, though his impact on their victories is hotly debated.

In 2006, Humala praised Chavez’s policies as a sign of a new era in Latin America. But, in the recent presidential campaign, he suggested that his policies would resemble those of Lula, not Chávez. In particular, he would seek to emulate Lula’s efforts to include vast sectors of the population in the benefits of a strong economy.

Today, with Venezuela’s economy mired in high inflation and overly dependent on oil, Chávez is fading as a regional model and guide. He has also been startled by the rise of domestic opposition. So Brazil’s mix of diversified economic growth and redistribution is a far more appealing example.

Indeed, a major reason for Humala’s victory was García’s inability to secure the benefits of growth for Peru’s poorest people. Humala’s main campaign argument was that he would not risk the “success” of Peru’s economy, but would, on the contrary, strengthen it. His fight against poverty and social exclusion would be undertaken as part of that effort.

Humala comes to power in a regional environment of moderation and growing economic integration, which he would disturb at his peril. García recently signed an economic agreement with Chile, Colombia, and Mexico, called Pacto del Pacífico, which is destined to reorient Latin America’s economies. These countries will jointly seek to develop a bigger presence in Asian markets, and to offer developed countries a safe option for capital investments in emerging markets. Moreover, each of the countries has bilateral free-trade agreements with the others and with the United States (though the US Congress has yet to approve the United States-Colombia Trade Promotion Agreement, as it is officially known).

Breaking with these strategic policies would harm Peru’s economy. It would also harm Humala’s domestic political base and isolate him in the region. He would not be able to lean on Brazil, the moderating regional power, but would inevitably fall under the sway of Chávez and Morales, deterring foreign investors and harming the country’s foreign relations. Cuba is out of the question as a patron, due to its preoccupation with Raúl Castro’s efforts to reshape its depleted economy in an improbable bid for Chinese-style capitalism in a one-party state.

So Humala’s Latin American options are limited: Venezuela, Brazil, or the countries of the Pacto del Pacífico. Although the last two options might be difficult to merge –Mexico might not want the competition of such a large player as Brazil – they are not mutually exclusive. In fact, Brazil’s leaders have good reason to be flexible: their country needs the access to the Pacific that Peru and Chile offer.

The local stock market’s fall immediately after Humala’s victory is a clear sign that the most influential forces in the Peruvian economy will continue to press for deeds, not promises – deeds that benefit their interests, of course. Humala most likely will not follow market dictates robotically. But he will not be able wholly to avoid them.

Finally, there is the question of political effectiveness. Humala’s coalition, Gana Perú, will have a plurality of representatives in Peru’s congress, but will need the votes of ex-president Alejandro Toledo’s party to have a controlling majority. Toledo, a Stanford graduate and a moderate politician, supported Humala during the campaign and provided him with economic advisers, which proved to be decisive in establishing the credibility of Humala’s retreat from radical policies.

Both the internal and external environments in which Humala finds himself – and the fact that he won by a margin of only three percentage points – seem to call for moderation and consensus. Half of Peru’s citizens did not side with him. Polarization may have proved functional to winning an election, but Humala will have to broaden his support in order to forge the consensus he needs in order to govern.

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