Our new issue, “The Working Class,” is out in print and online now. Subscribe today and start reading.

Peru’s Neoliberal Success Story Is in Meltdown

An undemocratic power grab by hard-right politicians in Peru was defeated by popular mobilization on the streets. The Peruvian political crisis has deep roots in a failed model of technocratic, neoliberal governance that has turned the state into a plaything of private interests.

A demonstrator waves a Peruvian flag in front of National Congress on November 16, 2020 in Lima. (Ricardo Moreira / Getty Images)

On the night of Saturday, November 14, two young people lost their lives in the biggest demonstrations that Peru has witnessed for twenty years. Throughout the country, hundreds of thousands of people took to the streets to protest against the ousting of president Martín Vizcarra and the seizure of power by a corrupt group of congressmen.

Those politicians tried to present Vizcarra’s removal as a legal transfer of power, but the protesters on the streets more realistically saw it as a coup. This did not entail a charismatic military leader sweeping to power, but rather a group of political operators blatantly promoting private financial interests. The Peruvian political system reached a deadlock, and the streets took back power, forcing interim president Manuel Merino to step aside after less than a week in office.

In neighboring Chile, opposition to the right-wing government of Sebastián Piñera and the country’s long-standing neoliberal constitution has been building up strength over time, leading to a successful referendum that has now started the process of rewriting the constitution.

Peru, on the other hand, has experienced a rapid descent into political turmoil. The resignation of an interim president almost as soon as he came to power was a big shock, leaving the country with a political vacuum. What links Peru and Chile is popular repudiation of an imploding political regime.

Roots of the Crisis

For many observers, Peru in recent years had seemed to be a neoliberal success story in Latin America. After a long period of political violence, economic crisis, and authoritarian government, the last two decades have been characterized by democratic handovers of power, and economic growth based on natural-resource extraction.

The transition to democracy in 2000 brought transparent elections, separation of powers, and a sweeping decentralization process. Peru did not go through a cycle of popular mobilization and left-populist politics of the kind seen in Ecuador or Bolivia.

The election of a self-proclaimed nationalist, Ollanta Humala, as president in 2011 gave hope to those who wanted to increase the role of the Peruvian state in the country’s economy. However, once Humala was installed in power, he rolled back on his campaign pledges and shied away from economic policies that might antagonize the powerful business lobby, CONFIEP (the National Confederation of Private Business Institutions).

To understand the ousting of president Vizcarra, one must consider the slowdown of an economy based on mineral exports, the swelling up of corruption scandals, and a political conflict between Peru’s executive and legislative branches of government.

The drop in the price of minerals on the world market and the ensuing loss of foreign-exchange revenues brought an end to the Peruvian economic “miracle.” The rents that used to trickle down through Peru’s state and society were drastically diminished as a result.

Ousted president Martín Vizcarra. (Wikimedia Commons)

Meanwhile, there was a spillover into Peruvian politics from Brazil’s Lava Jato (car wash) investigation as it probed the Brazilian construction company Odebrecht and the huge bribes its officials admitted paying in other countries.

The fallout from the scandal eventually reached the highest echelons of Peru’s political class, engulfing all four of the country’s presidents in the years between 2001 and 2018: one committed suicide to avoid surrendering to police, one was placed in preventative detention, one is under house arrest, and another is still fighting extradition from the United States.

In 2016, there was a presidential runoff between two candidates: Keiko Fujimori (daughter of the authoritarian former president Alberto Fujimori, who held office from 1990 to 2000) and Pedro Pablo Kuczynski, an elderly liberal. Kuczynski won the second round by a wafer-thin margin: 50.1 percent to 49.9 percent — barely forty thousand votes out of more than eighteen million cast.

Kuczynski, an economist who formerly worked for the World Bank, embodied the social elite from Lima’s rich neighborhoods. The Peruvian electorate did not necessarily vote in favor of Kuczynski; rather, he benefited from a mobilization against the possible return of the Fujimori family and their brand of right-wing authoritarian politics.

However, Fujimori’s party, Popular Force, still had a majority of seats in the Peruvian Congress — seventy-three out of a hundred thirty, having won just over 36 percent of the vote — and it went on to wage all-out war on the new president.

In a bid to appease the Popular Force legislators, Kuczynski pardoned Alberto Fujimori, who had been imprisoned for corruption and human rights abuses in 2017. Kuczynski went on to offer infrastructure projects to members of Congress, hoping to buy their support and stave off his removal from office. The ensuing scandal led to his resignation in March 2018.

Vizcarra’s Ouster

Kuczynski’s vice-president, Martín Vizcarra, took his place as the country’s head of state. Unlike his former boss, Vizcarra does not come from the Lima elite. He was a regional president of the small mining region of Moquegua, who believed in working with investors, especially from the extractive industry, and saw efficient governance as the answer to Peru’s political problems.

It wasn’t simply the international Lava Jato controversy that gave rise to scandals in Peru. A courageous domestic prosecutor investigated a corruption ring that involved drug traffickers in the port city of Callao, the justice department, and Popular Force members of Congress. In his new role as president, Vizcarra supported anti-corruption prosecutors, which intensified his conflict with the Fujimori-controlled congress.

In the end, Vizcarra ordered the dissolution of Congress in an attempt to resolve the crisis, paving the way for new legislative elections to take place in January 2020. Although the Fujimori party lost the vast majority of its seats, dropping from 36 percent of the vote to just over 7 percent, the same style of politics nonetheless remained entrenched within Congress.

Parties in Peru have become short-term amalgamations of politicians linked by personal interests with discreet support from economic elites. The congress elected earlier this year included representatives from nine different parties.

The elections did not end the confrontation between Vizcarra and Peru’s legislature. The new Congress declared that the president should not be allowed to carry on in his post, because of pending corruption investigations.

The allegations against Vizcarra concerned the building of a hospital in Moquegua while he was governor and dated back to 2013, well before he became president. The law states that charges against sitting presidents should be delayed until after their term is finished, but Congress removed Vizcarra from office anyway, accusing him of “moral incapacity” to serve as president.

In doing so, Peru’s legislators misused a power that is only meant to be deployed under extreme circumstances. The congressional leader, Manuel Merino, ascended to the presidency, and immediately got to work on measures designed to favor privileged economic interests, such as legislation to facilitate the lucrative private university sector and the rollback of environmental regulations for mining companies.

The members of Congress who orchestrated the coup against Vizcarra are themselves at the center of major corruption inquiries, and their main goal was to protect themselves from a president they held responsible for such investigations. Their own parties largely opposed the move, revealing the impotence of party politics in Peru, and the extent to which Congress had become a forum to advance private interests.

However, after days of protest and violent police repression, Manuel Merino stepped down, in turn leaving a power vacuum and a large question mark hanging over the entire political system. On November 17, Congress chose a new interim president, Francisco Sagasti.

Meanwhile, the Peruvian constitutional court declined to hear a case challenging the removal of Vizcarra from power. The case would have argued that Vizcarra’s ouster was unconstitutional, as charges against sitting presidents should be delayed until after they have finished their term, and that Congress had clearly misinterpreted the “moral incapacity” clause it invoked. Controversially, the court claimed that Vizcarra’s case was no longer relevant, since he had already been ousted as president.

Technocratic Dreams

Why did Vizcarra’s removal lead to this eruption of popular discontent? Why did so many people take to the streets in response? This maneuver by members of Peru’s political class was no one-off event: it was simply the latest episode in a series of scandals that has delegitimized that class in the eyes of countless Peruvians. However, to fully comprehend the current implosion of Peru’s political system, we have to look back further.

The events of this year mark the zenith of Peru’s neoliberal political regime that was installed in the 1990s. Alberto Fujimori’s government, which held power during that decade, first took shape as a fragile, opportunistic coalition of political and economic actors: a populist president, national and international business interests, the Peruvian army and intelligence service, organized crime and state technocrats. It engaged in vote rigging and controlled the Peruvian media.

Fujimori’s government purported to offer a form of popular, capitalist modernity based on policies to foster entrepreneurship and roll back the state. At the same time, it conducted a dirty war characterized by major human rights abuses as part of its struggle against the Maoist Shining Path insurgency.

In many ways, the Fujimori government was more in line with the modern style of neoliberal authoritarianism than the Pinochet dictatorship in Chile, which was rooted in the Cold War period.

Peru’s 1993 constitution made it one of the most investment-friendly economies in the world. The makeup of the Peruvian state favored private enterprise in every conceivable area, from pension funds to the Amazon rainforest. It promoted the idea of technocratic governance over and above the messy business of politics. The flip side of the Peruvian “success story” was the erosion of collective rights for workers and peasants.

There have been so many corruption scandals that they must be seen, not as the work of a few bad apples, but as something endemic to the regime itself. The Odebrecht case came after countless others, revealing the extent to which the public sphere had been colonized by private interests. Now the COVID-19 crisis has dealt a hammer blow to Peru’s technocratic dream.

The country has the highest coronavirus mortality rate in the world. Although the government appeared to take the right steps at the beginning of the pandemic, quickly imposing a lockdown and providing financial support for those in extreme poverty, these measures failed to halt the spread of COVID-19.

This was partly because nearly three-quarters of the Peruvian workforce are employed in the informal sector, and partly because the government’s policies simply did not work in practice. Starved of funding, the public health sector was unable to respond effectively to the pandemic.

The Next Stage

In the wake of the protests, a new technocratic government has taken office. The new interim president, Francisco Sagasti, is an engineer with a PhD from the University of Pennsylvania. He spent his formative professional years at the World Bank. The prime minister, Violeta Bermúdez, is a lawyer who used to head the Peruvian office of the US development agency, USAID.

Newly appointed interim president Francisco Sagasti. (Hugo Curotto / Getty Images)

Some Peruvian commentators hope that this administration will be able to address the country’s problems simply by virtue of being honest and having the right technical capacities among its members. But this idea of government as a technical matter is itself very much a part of those problems. Attempts to root out corruption cannot succeed unless they face up to the way such corruption is embedded in the Peruvian state’s current structure.

Peru’s neoliberal dream has turned into a nightmare, one in which society ceases to exist and politicians are no longer seen to represent anybody, simply acting on behalf of their own financial interests — and those of their allies — at the expense of the common good. Hope for the future does not lie in the present interim government, but in the growth of political engagement from Peru’s younger generation and the politics of the street, outside the sphere of conventional parties.

The young people who protested on November 14, including those who were killed, injured, and disappeared, managed to halt a coup. They could now take inspiration from what is happening south of the border in Chile and start pressing for their own constituent assembly, so that the people of Peru can decide collectively on the rules by which they want to live.

One placard at a demonstration in central Lima read: “They messed with the wrong generation,” reminiscent of the words of the great Peruvian poet César Vallejo: Ya va a venir el día, ponte el alma (the day is about to come, put on your soul).