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A second view on Peru—
Humala’s Big Win

By MARK WEISBROT

Humala: Will he deliver or turn out to be a leftist "paper tiger"?

The victory of left-populist candidate Ollanta Humala in Peru’s election is a “big f*ng deal,” as Vice President Joe Biden famously whispered to Obama on national TV in another context. With respect to U.S. influence in the hemisphere, this knocks out one of only two allies that Washington could count on, leaving only the right-wing government of Chile. Now Brazil, Argentina, Venezuela, Bolivia, Ecuador, Paraguay, Uruguay and Peru have left governments that are more independent of the United States than Europe is. And Colombia under Manuel Santos is now siding with these governments more than with the United States.

This means that regional political and economic integration will proceed more smoothly; although it is still a long-term project. On July 5, for example, heads of state from the whole hemisphere will meet in Caracas, Venezuela, to proceed with the formation of CELAC, (Community of Latin American and Caribbean States). This is a regional organization that includes all countries except the United States and Canada, and which – no matter what anyone says for diplomatic purposes — is intended to displace the Organization of American States (OAS). The new organization is a response to the abuse of the OAS by the United States (which controls most of the bureaucracy) for anti-democratic purposes, most recently in the cases of Honduras and Haiti.

These institutional changes, including the vastly expanded role of UNASUR (the Union of South American Nations), are changing the norms and customs of diplomatic relations in the hemisphere. The Obama Administration, which has continued the policies of “containment” and “rollback” of its predecessor, has been slow to accept the new reality. As a result, it does not have ambassadors in Bolivia, Venezuela and Ecuador.

The election is also important for Peru, for a number of reasons. As conservative Peruvian Nobel literature laureate and politician Mario Vargas Llosa said, Humala’s win “saved democracy.” Former president Alejandro Toledo said, “The people have won, democracy has won, the memory of the people won. The people have opted for economic growth with social inclusion.” Indeed it would have sent a terrible message to Peruvians and the world if the daughter of someone who is in jail for multiple political murders were elected president. Although she made some efforts to distance herself from his crimes, she was still running on his name and legacy, and with the help of his advisers.

The election is interesting for other reasons. First, it is another example of the voters going against the vast majority of the country’s rich and elite, including the most influential of that group – the major media. Leftists may criticize Humala for some of the promises that he made (e.g., no nationalizations) in order to get the support of some political actors. But it remains clear that he was not the candidate of Peru’s rich and powerful. This is one of the great and nearly unprecedented things about democracy in South America that has happened repeatedly in recent years – that those who control most of the income, wealth, and means of communication in a country can be defeated in an election. We are still a long way from any such result in our own presidential elections in the United States.

It is also interesting that Peru’s traditional elite were defeated – in both the first and second rounds of the election — despite record economic growth over the last decade. GDP growth has averaged 5.7 percent annually since 2000, about the highest in the region. To give credit where credit is due, these governments (Alejandro Toledo’s and Alan García’s) got their most important macroeconomic policies – fiscal, monetary, and exchange rate – basically right, which has not been the norm in the neoliberal era. They also responded to the world recession with counter-cyclical policies and minimized the economic damage. As would be expected from the economy’s rate of growth, there were some improvements in peoples’ lives, including many poor people: The official poverty rate declined from 55 percent in 2001 to 35 percent in 2009. Life expectancy rose 70.5 to 73.5 and infant mortality fell from 35.1 to 19.4 per thousand (from 2000-2009).

But by 2009, Peru still had 62 percent of its population living on less than three dollars a day, and the percentage is certainly about the same today – Peru is a majority-poor country. With vast regional, urban-rural, ethnic, and overall income and wealth disparities – the poverty rate is 60 percent in rural, versus 21 percent in urban, areas — most people understandably felt cheated. Most importantly, the governments of García and Toledo didn’t deliver on the kinds of big initiatives that the left governments in the region delivered. Bolivia lowered the retirement age from 65 to 58 and greatly expanded the public pension system, nationalized its hydrocarbons industry, and increased social spending. Ecuador expanded social spending, especially on health care. Venezuela provided free health care to its citizens and tripled real social spending per capita, greatly expanding education, including free university education. Brazil had a 60 percent real increase in the minimum wage (in Lula’s eight years) and some modest increases in anti-poverty spending. Peru’s last two governments did not do these kinds of things.

The lesson is clear: those political parties and governments that want to make sure they are re-elected have to promise and deliver real economic and social change. South America’s left governments of the past have helped to make this a part of the democratic process, and this influence is likely to affect the region for many years to come.

Mark Weisbrot is an economist and co-director of the Center for Economic and Policy Research. He is co-author, with Dean Baker, of Social Security: the Phony Crisis.

This column was originally published by The Guardian.

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