Peruvian stocks lost a record 12% of their value as local and global investors jettisoned mining shares after left-leaning nationalist Ollanta Humala won the second round of Peru's presidential elections on June 5.
The multi-billion dollar plunge reflects the fear and hostility that “market forces” instinctively bear toward an expression of the popular will in “developing” resource-rich nations like Peru.
Humala defeated the right-wing candidate Keiko Fujimori with 51.3% of the vote. Keiko is the daughter of jailed ex-dictator Alberto Fujimori.
Humala's win comes after gains for left-of-centre candidates in regional elections last year. It is a sign that the country is at last recovering from the false association of left and progressive politics with the terrorism of Shining Path guerillas.
Humala was the candidate for Gana Peru, an electoral alliance formed by his Peruvian Nationalist Party (PNP). Given the powerful forces that have conspired to scupper left forces in Peru in recent years, the result is a significant achievement and represents a major political realignment.
Opposing Humala are the forces of capitalist globalisation, deeply committed to the present order of injustice.
Mauricio Cardena, director of the Latin America program at the right-wing Brookings Institution, was quoted by Bloomerberg on June 7 as saying: “Humala has to come out and send a signal or this [market] sell-off won’t end.
“The market is asking for a response. It wants to hear who the finance minister will be.”
Bloomberg editors said on June 9: “Humala has said that Peru’s mineral wealth … should become an engine for social inclusion. We hope he will follow not the Chavez path…
“It will be a hopeful sign if … Humala offers the finance and trade ministry posts to respected officials from a previous free market government.”
In other words, Humala should send a clear signal that Peru’s mineral wealth will continue to enrich multinationals at the expense of the majority.
The Brookings Institute, and the United States government, had been hoping for a Fujimori win — and with it guaranteed plunder-as-usual for another five years.
Over the past decade, Peru’s economy has expanded on the back of a global metals boom. Successive US-backed “business-friendly” governments have encouraged foreign investment, offering low taxes and a cavalier approach to human rights and environmental standards.
Mining companies have pushed many farming communities off their land to an uncertain future in urban slums.
Peru has become the world’s leading silver producer and the second-highest producer of copper. But underneath the “free trade” hype, the centuries-old pattern of wealth distribution remains essentially unchanged: the usual winners (Lima-based elites) have increased their share of national income and the usual losers (regional, highland and Amazonian populations) have stayed mired in poverty.
Voting patterns reflected this divide. Fujimori carried Lima, but in the southern highlands of Arequipa, Humala won more than two-thirds of the vote.
Among the many outrages that took place when Peru opened up to big capital in the 1990s was the forced sterilisation of about 200,000 indigenous highland women by Alberto Fujimori’s government.
Memories of such abuse prevented many voters from backing Keiko, who included many of her father’s discredited henchmen in her team.
Humala’s own human rights record is far from blemish-free (he served as a high-ranking officer under Fujimori before leading an insurrection in 2000).
But it is his promise of a “major transformation” and “national reconciliation” that is now the focus.
With tonnes of precious metal pouring out of the country, at least a third of the population still lives on less than US$3 a day in an increasingly contaminated land, where traditional subsistence agriculture has been undermined by mining.
International investors and domestic elites are committed to maintaining Peru as one of the most unequal societies in Latin America.
Any deviation from the neoliberal model, no matter how slight, is a source of great concern to these sectors — prompting fears about the “loss” of another US ally in an increasingly “red” western hemisphere.
Humala has promised higher mining taxes to help pay for Peruvian schools, hospitals and pensions — hardly a radical experiment in socialist economics.
But the prospect of even a mild reform program — which would mark a small but welcome step towards sustainable development — was enough to scare the markets.
During the campaign, Humala pledged to redistribute Peru's wealth. But he also said his government would respect “market capitalism” and sought to portray himself in the mould of Lula, Brazil's former business-friendly president, rather than Venezuela's socialist President Hugo Chavez.
The government faces the huge challenge of fulfilling its reformist pledges to its poor supporters while simultaneously placating the crony capitalist forces that have become the arbiters of Peru’s fortunes.
Regardless of how Humala intends to resolve this contradiction, one thing is clear: he was elected by the people to bring about social change.