On July 28, Ollanta Humala was inaugurated as the 94th president of Peru. The victory did not come easily; he beat Keiko Fujimori, the daughter of former president Alberto Fujimori, by less then 2 percent of the vote. Further, Humala had to overcome baggage from his previous attempts for the presidency, most recently in 2006, when he openly embraced the influence of Hugo Chavez. The thought of having another leftist leader with a radical agenda sparked fears among international investors, business elites, and the urban middle classes in Peru. After a decade of continuous growth, many Peruvians feared that a major change in economic and social policies would bring the country back to the instability of the 1990s.
Understanding this, Humala’s campaign premised on maintaining the macroeconomic policies that allowed the breathtaking economic growth, while implementing a social agenda focusing primarily on tackling poverty, expanding childcare, and reforming the pension system. Yet, this moderation was not from an evolution of beliefs; rather, Humala understands that he is constrained by various domestic and international factors, and must tackle the center in order to survive politically. As the newly elected president begins his term, applying this understanding will remain crucial to his success.
Domestic Awakening:
The differences between 2006’s candidate Humala and 2011’s President Humala appear startling. In 2006, Humala ran on a nationalist platform that mirrored Hugo Chavez’s reign in Venezuela. When running again this year, Humala adapted to the demand of a more moderate electorate, allowing him to win the presidency. The apparent radical change nonetheless springs from several domestic factors that shaped Humala’s promises and rhetoric towards the center of the Peruvian electorate.
At the forefront of his constraints is the economy. According to the U.S. State Department, Peru’s economy grew at around 9.8 percent in 2008, unmatched in the region. Humala’s victory unnerved foreign investors, major players in Peru’s economy, and prompted a 12 percent drop in the stock market. Eduardo Dargent, professor of political science at the Pontificia Universidad Católica del Perú, told the HPR, “These early signs of economic distress gave [Humala] the last push he needed towards economic moderation. He realized the market laws were real and that he needed market-friendly policies to govern.” His initial reception proved the motivation that brought Humala to embrace centrist policies that he had half-heartedly advocated in the campaign.
With the private sector and foreign investors apparently at ease, Humala continues to face a source of pressure that could ultimately challenge him as a leader: the public. All of Humala’s moderation schemes aim to secure a base of public support. When asked if Humala would remain a moderate, Dargent pointed out that “it partly depends on his approval ratings, if there are signs that these ratings are hurt when he takes steps away from moderation….But if he is applauded by the public when he takes some more radical steps, he may return to some of his more radical agendas.” So far, the President’s approval ratings have risen since his election. However, Humala remains a moving target ideologically and might flip should his approval head south.
A Different World Around Him:
Although most analysts agree that domestic factors are the most important when understanding Humala’s policies, there undoubtedly exist linkages between Humala’s moderation and shifting global conditions, especially in Latin America. As Cynthia McClintock, professor of political science at George Washington University, expresses, “Peruvians know that the major investors in the country are foreign—the U.S., China, Europe, and other Latin American nations.” Investments have become a major incentive for President Humala to maintain strong relationships with these countries, and he has pressure from domestic public opinion so to do. For example, during Humala’s visit to Washington in the fall of 2010, “he presented himself as a social democrat and was calm, cool, and collected” says McClintock. Had he pursued an extreme left agenda, Humala might have spooked investors even before the campaign, significantly weakening his electoral prospects.
Further, it is important to take into account how much Latin America has changed during the last five years. Steve Levitsky, professor of government at Harvard University, argues that in 2006, Hugo Chavez was at the height of his power. Joining Chavez represented the possibility of obtaining subsidies from his oil bonanza. Nevertheless, by 2011 Chavez’s domestic problems forced him to tone down his regional aspirations, while making other leaders more hesitant to follow his lead. Today, the Brazilian model, championed by former President Lula, has become the pre-eminent form for Latin American development. Brazil’s success may have led Humala to realize that he should follow a more moderate path, to gather domestic and international support. After the 2006 election, he hired advisors from the Lula administration, and by 2011 he had already redefined himself as a moderate.
However, Michael Shifter president of the Inter-American Dialogue told the HPR “I think the Chavez vs. Lula formulation contains false options. He will be neither.” In Shifter’s view, Humala remains a work in progress. The President may have to strike a balance between economic moderation—reforming rather than retransforming the economic structure—and pushing social reforms, a problem which Humala has yet to tackle. Further, conditions vary broadly across Latin America, especially between Peru and Brazil or Venezuela. Peru lacks the energy resources of either country, and is still significantly poorer by any metric. Thus, Humala must juggle an entirely different set of concerns as he strives to shape the country from a center-left coalition.
Looking Towards the Future
After three months of Humala’s presidency, public opinion and private investors remain cautiously optimistic about the direction of Peru’s future more broadly. Humala has been able to overcome the first challenges of the presidency: to keep foreign investment secure and win the public’s approval. However, he has yet to attempt to fulfill his promises on social reform, which are bound to be more contentious and controversial. Despite all of this apparent success, it remains an open question whether a change in the domestic and international conditions might prompt a sharp turn to the left. Many people in Peru are still skeptical and fear an ultimate ideological reversal. Should Humala take such a step, foreign investment could flee, Peru’s hard-won economic gains reverse, and the President’s ability to implement long-term sustainable reforms could be thrown into jeopardy.