Peru - Governance challenges ahead
Castillo plans to reform the constitution and executive-legislative battles will emerge.
Over the past two weeks, I’ve worked with Mitra Taj, an independent journalist based in Peru, to interview people in and around the two campaigns in Peru. Yesterday’s newsletter focused on how moderates have won the internal battles within Pedro Castillo’s campaign. However, “moderate” is a relative term and still implies some major changes for the mining and gas sectors. Today’s newsletter contains additional commentary from the interviews about how Castillo plans to govern as well as some comments from a pro-Fujimori lawmaker.
Castillo will push for a constitutional reform
This point is clear in all of Castillo’s campaign and interviews confirmed this is one priority. There is uncertainty about what reforms are possible under the current constitution vs what will require rewriting the constitution. Officials close to Castillo expect him to lack the votes in Congress to push a constitutional change, meaning he will likely go the route of gathering signatures and organizing a public referendum that works around the Congress.
Although the moderates are winning the internal campaign battles, nearly every source indicated that constitutional reform is on the agenda and one goal of that reform is to change the government’s role in the economy. A new constitution would give the state more influence, support state-run industries, and give the government more power to regulate businesses and negotiate past agreements. Roberto Sanchez said that “there is a great opportunity for large changes in the country” and promoted the idea of a constitutional assembly that would rewrite the constitution to increase the state role and better regulate the market.
Many are expecting executive-legislative clashes to resume once the president’s honeymoon is over
The shift to the center that has occurred by both candidates is partially about the election and voters. But there is also a recognition that getting an agenda passed through the Congress will require moderation and compromise as well. Advisors for both campaigns are looking beyond the election and to the governing.
One Castillo supporter raised the possibility of using the president’s ability to dissolve the legislature after two no confidence votes to force new legislative elections if the Congress proves to be a roadblock to his policies.
Castillo will also need to consider the military
A former government minister connected to a centrist party had tough words for both candidates, but focused his comments on if and how Castillo can consolidate his control of the military if he wins. This is an issue I’ve heard multiple analysts bring up in recent weeks, wondering how military commanders will react to a candidate who allegedly has links to extremists including elements of Sendero Luminoso.
The source said that Castillo would likely move quickly to install military commanders who are more supportive of him. In doing so, Castillo may need to form an alliance with Antauro Humala and promote military leadership who are supportive of Humala.
Fujimori may raise taxes on the mining sector
When asked whether the campaign was pulling Keiko Fujimori to the center or even the left, Hernando Guerra, an ally of Fujimori and Congressman-elect from Fuerza Popular, responded by suggesting that Fujimorismo has always worked for the poor and will continue to invest in programs to cause poverty to decline. To make his case, he pointed to popular social programs implemented by Alberto Fujimori.
As part of paying for those social programs, “There is a small space for increased taxes on excess profits given the high prices (of commodities)” and the extra money would be directed via public-private partnerships to benefit the zones around mining sites, particularly to help agricultural producers who are concerned about the environmental impact. The party also plans to shift some of the current redistribution of mining royalties to direct payments to poor families, circumventing local public officials.
One thing I noted from the interview with Guerra was how disciplined he was at being on the talking points promoting Fujimori and attacking Castillo. The interviews with people around Castillo show a campaign with in-fighting and a messaging muddle. The Fujimori campaign is disciplined and organized.
As if to emphasize that point, between the time I published yesterday and today’s newsletters, Kurt Borneo announced that he has withdrawn from the Castillo team.
Castillo remains the favorite to win the presidency. But if he loses, the Fujimori campaign’s organization and the Castillo campaign’s disorganization will be considered a critical factor.
Thanks for reading
Yesterday’s newsletter on Castillo’s campaign was sent only to paying subscribers. I’ll drop the paywall on the article on Friday. Thanks to everyone who pays to subscribe. Your support means I can continue working with journalists around the region to do original reporting for this newsletter.