July 28, 2021

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PERU: Castillo honeymoon unlikely to last as major obstacles and tests loom

BY Nicholas Watson

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( 5 mins)
  • Pedro Castillo will be sworn in as president today, 28 July. Castillo should also unveil his cabinet later in the day.
  • The policy outlook is hazy and it is far from clear how Castillo can push ahead with his signature promise of constitutional reform.
  • Congressional antagonism is likely to rear up sooner rather than later, threatening governability. How Castillo and his Peru Libre (PL) react to obstacles is an unknown.
  • It is almost impossible to discern the five-year horizon of Castillo’s term, other than that political turbulence is highly likely.

Policy outlook

Castillo’s original manifesto was alarming in its radicalism; a second, shorter version – while seemingly more moderate – lacked specifics. The policy outlook therefore looks hazy, with Castillo expected to provide some more specifics in his inaugural address today. While the president-elect has backed away from the threat of nationalizations, he has remained adamant on his pledge to hold a referendum on a new constitution. He has also pledged to introduce a new mining royalty (with Chile’s pending mining royalty initiative as a model), presumably as part of a wider tax reform, while renegotiating tax stability agreements with large companies (thereby invalidating their very purpose). Other issues on the agenda could include agrarian and pension reforms, as well as plans to accelerate the Covid-19 vaccine rollout.

Castillo versus Cerron

The fundamental question ahead is who will be in the political cockpit: Castillo or the PL party boss, Vladimir Cerron, an unreconstructed radical leftist who studied medicine in Cuba. Castillo’s candidacy was a neat solution: Castillo was a candidate with potential who lacked a party to back him, while the PL was a party without a candidate since Cerron is banned from holding public office following a corruption conviction. In government, that relationship could prove to be difficult and destabilizing for Castillo. A majority of the 37-strong PL congressional bloc is loyal to Cerron and is unlikely to abandon him (his brother Waldemar ranks among them). True to his Marxist convictions, Cerron seems to envisage the PL operating as a vanguard ensuring that Castillo remains faithful to the party’s ideals.

Balance and inexperience

This dichotomy reflects the tension that there will be under the new government between gradualism and radical change. Excessive gradualism will create headaches for Castillo given his supporters’ expectations (and Cerron’s looming influence), but radicalism would also detonate governability crises since half of the electorate is deeply wary of the incoming president and a majority in Congress opposes Castillo. Government anywhere frequently involves walking a political tightrope and balancing out factional pressures; the problem in this case is that both Castillo and his closest advisors lack experience of public administration and policy delivery. An improvised campaign and a rushed transition exacerbate this problem.

Cabinet

The failure to announce any cabinet appointments in the run-up to today’s inauguration speaks to the incoming administration’s lack of strength in depth. Here too Cerron’s influence is evident. The PL party boss has made a “recommendation” for the prime ministerial (PCM) job and criticized Pedro Francke, who joined the Castillo team as principal economic advisor in a bid to project a more moderate image. Castillo’s pick to coordinate defense issues also showed muddle and ineptitude; the appointee was forced out over his links to the Movement for Amnesty and Fundamental Rights (Movadef), which is the Shining Path (SL) terrorist group’s political wing. It is difficult to believe that the decision of the Chief of the Joint Command of the armed forces, Gen. Cesar Astudillo, to step down early was not linked to this episode.

Congress

Congress is likely to represent one of Castillo’s most significant challenges and checks. The PL plus its new ally, Together for Peru (JPP), total 42 out of 130 seats. The Purple Party (PM), with three seats, could offer early support but this is clearly well short of a simple (66) majority, let alone a (87) two-thirds majority. Fuerza Popular (FP), the Alliance for Progress (APP), Renovacion Popular (RN), Avanza Pais , and Podemos Peru are by no means homogeneous but together comprise a 64-strong bloc that can block legislative bills and easily strike down Castillo’s constitutional reform.

The election earlier this week of the new congressional leadership provided an early demonstration of the depth of opposition to the PL, as well as the PL’s inexperience. The PL’s slate was rejected on procedural grounds, while an opposition list headed by Maricarmen Alva (Popular Action, AP) won. Note that Alva is from the conservative AP faction that pushed for Martin Vizcarra (2018-2020)’s impeachment and resulted in the brief and ill-fated Manuel Merino presidency last November. Alva has made positive noises about working with the incoming administration. However, sustained executive-legislative cooperation would be an aberration given that Congress has become an increasingly confrontational and politically opportunistic arena in recent years. Any attempts by Castillo to bypass Congress – as his constant references to the “people” suggest he might – would trigger congressional outrage. The constitutional question could be an early trigger to tensions.

Other opposition fronts

Opposition to Castillo will not be confined to Congress. Opposition parties will look to solidify gains made in the 2021 electoral process in the local elections scheduled for October 2022. None more so that the RN’s Rafael Lopez Aliaga, an ultra-conservative businessman who came third in the April first- round vote. With Keiko Fujimori widely seen as politically finished after her third consecutive election defeat, Lopez Aliaga clearly sees an opportunity to pick up her votes and gain the Lima mayoralty, which would position him as the most prominent Castillo opponent and a bulwark against leftist economic intervention. Lopez Aliaga will also look to exploit anti-Castillo sentiment within the armed forces, where the recent controversy in defense issues related to Movadef has added to existing military unease.

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