Latin America Advisor

A Daily Publication of The Dialogue

Will PPK Be Able to Complete His Term in Peru?

Several public officials in Peru have resigned in the wake of President Pedro Pablo Kuczynski’s near-impeachment and his subsequent pardoning of former President Alberto Fujimori, who was serving a 25-year prison sentence for abuse of power and human rights violations. The pardon led to street protests, leaving Kuczynski’s presidency on shaky ground despite surviving the impeachment vote in December. Will Kuczynski be able to complete his five-year term? How can he regain public confidence and political influence? Will Peru’s fractured politics throttle back investment and economic growth this year?

Alexander F. Watson, former U.S. ambassador to Peru, former assistant secretary of state for Western Hemisphere affairs and managing director at Hills & Company, International Consultants: “The most serious damage caused by this series of events is to the public’s confidence in Peru’s fragile political system. Political leaders again are seen as cynically pursuing their own narrow political interests at the public’s expense. President Kuczynski has lost credibility by denying to Congress that he had any relationship with the Odebrecht construction firm, and then by pardoning highly controversial former President Fujimori in what appears to be a favor in return for the abstention by Congressman Kenji Fujimori and others, which torpedoed the impeachment motion. The president is severely wounded politically, as several ministers, legislators and important supporters have abandoned him, leaving him isolated. The legislatively dominant fujimorista Fuerza Popular party is also damaged by its politically driven rush to impeach Kuczynski without careful consideration of the facts and then failing to do so when Kenji defected, as well as by credible accusations that party leader Keiko Fujimori received bribes from Odebrecht. Relations among the three Fujimoris and the future of Fuerza Popular could become a soap opera. Peruvians are understandably disgusted and outraged by these developments, and some are seeking reversal of the pardon. How this will play out politically is far from clear. Investors are accustomed to Peruvian political confusion and will not panic, but if Kuczynski, with whom they are comfortable, should fall from power, they are likely to hold their breath until the dust clears. The impact of all this on the April Summit of the Americas hosted by Peru, which ironically chose ‘Democratic Governance against Corruption’ as the principal theme, will be interesting.”

Cynthia McClintock, professor of political science and international affairs at The George Washington University: “The odds are against President Pedro Pablo Kuczynski (PPK)’s completion of his term. PPK is dangerously isolated. Not only did he incorrectly deny dealings with Odebrecht, provoking the impeachment vote, but most Peruvians believe that he traded his survival of the impeachment vote for the pardon of former President Alberto Fujimori. Many Peruvians voted for PPK in the 2016 runoff because he was not in bed with fujimorismo, and they now feel betrayed. PPK has lost three of his best ministers and three of his party’s 18 legislators. Although PPK has promised a cabinet of ‘reconciliation,’ recruitment among members of small parties, grassroots politicians and progressive intellectuals—to whom PPK should have turned more at the start—will be difficult. The largest sector of fujimorismo, led by Alberto’s daughter Keiko, has consistently interpreted PPK’s efforts at accommodation as weakness and intensified its belligerence. Only the sector of fujimorismo led by Alberto’s son Kenji, who spearheaded the pardon effort, appears open to collaboration with PPK. Perhaps most problematic for PPK is that the investigation of his dealings with Odebrecht is proceeding (as it does for Keiko and former President Alan García). Investment delays due to the Odebrecht scandal and political instability are estimated to have cost Peru approximately 1 percent of GDP growth in 2017 and, although mineral prices are up, the cost could be higher in 2018. Ironically, PPK’s resignation might be the best way for him to restore Peruvians’ trust. If PPK and his two vice presidents were to resign, new elections would be called—the outcome preferred by most Peruvians. Peru’s current plight is in part the legacy of the 2016 election, in which a surging centrist presidential candidate was unfairly disqualified and the fujimorista party, with less than 40 percent of the legislative vote, won 55 percent of the seats.”

Francisco Durand, professor of political science at the Catholic University of Peru: “Kuczynski is safe, for now. No political analyst can predict if he will finish his term in office. The ‘political pardoning’ of former President Alberto Fujimori on dubious arguments (a tit for tat to get 10 votes from a fujimorista faction loyal to Alberto and avoid vacancy for ‘moral incapacity’) caused a storm; cabinet resignations, congressional losses in his own party, international condemnation and mass mobilizations with a strong participation of young people. Another consequence, more serious, is the president now looks as he really is: a transnational businessman willing to make deals with the devil. The universal condemnation of the ‘lobbyist president’ has further weakened his already weak position. The consequences of the perception that the emperor has no clothes are unpredictable and may determine his chances to remain, either because Congress tries and succeeds in organizing another impeachment process or because of continuing street demonstrations. The worst-case scenario may be avoided, due to a deeper fragmentation of political parties. Most notable is Fuerza Popular, led by Keiko Fujimori, who now cannot ignore the opinions or pressures from her father, the ‘historic leader,’ and Kenji, her younger brother, who organized the pardoning agreement. But also, the APRA party, which has lost its traditional discipline to vote along party lines, will be a factor. Luckily for Kuczynski, the economy has good prospects, mostly due to rising mineral prices and a few large copper investment projects (Michiquillay, Quellaveco). The question that no one can answer yet is whether political infighting will neutralize the positive effect of better terms of trade; whether Kuczynski remains weak, but viable, thanks to the ‘peace agreement’ with Alberto/Kenji’s fujimorista faction that steals the absolute majority Keiko had in Congress and thanks to the weakening of mass demonstrations; or if Peru is now in the eye of a perfect storm. All heavens will break loose, and both the political class and the business class will become increasingly isolated once the Odebrecht corruption scandal enters a new phase of damaging revelations that affect former Presidents Toledo, García, Humala, Keiko Fujimori and Kuczynski.”

Carlos Arata, partner in the corporate practice at Rubio Leguía Normand in Lima: “For sure, Kuczynski will finish out his term, even if some political factions seek his ouster again, due to the pardoning of Alberto Fujimori. I don’t expect such efforts to be successful. Fujimori’s recent freedom has split Fujimori’s party, Fuerza Popular, in such a way that it no longer has an absolute majority in Congress. Also, the party has lost a recurrent subject in Peru’s political world for the last 15 years: Fujimori’s freedom. It now needs to get closer to the government, which is closer than any other party to its political views. Otherwise, the population will confirm it as an obstructionist. The government needs to get things done, and Kuczynski in particular needs to clarify his situation regarding the Odebrecht corruption scandal. With the latter, he will get a burden off his back. Regarding getting things done, there are many things that need to be done and on many fronts. One major task is the reconstruction of the north of the country and the awarding of major infrastructure projects; a year has passed, and the north hasn’t seen any major work done. The precarious living conditions are still there. Also, no major public-private partnership projects have been awarded, and the country still has a huge infrastructure gap. Another important front is the Odebrecht scandal. So far, no big fish have been imprisoned; Alejandro Toledo is still hiding in the United States. Once the government starts with new projects and the reconstruction, the opposition will have few options but to support Kuczynski.”

Julio Carrión, associate professor of political science and international relations at the University of Delaware: “PPK’s move to pardon Fujimori salvaged his presidency in the short-term but has severely debilitated his overall position. He was already a weak president, with a tiny congressional representation (18 seats in the 130-seat unicameral Congress) and a runoff victory with the smallest of margins in Peru’s electoral history. The clumsy way in which the pardon was handled incensed his allies and many of his voters, who believed his promises that he would not pardon the former president. He lost two able operators in his cabinet (Carlos Basombrío and Jorge Nieto), and three of the most respected members of his congressional representation (Gino Costa, Vicente Zeballos and Alberto de Belaunde) quit the party. Nuevo Perú, the left-wing party that abstained in the impeachment vote, feels betrayed. Prominent supporters like Mario Vargas Llosa have voiced their deep disappointment. There is a sense that PPK is not the above-board technocrat that many believed, and some wonder if he is trying to protect himself from further revelations related to the Odebrecht scandal. His credibility has been irreparably damaged. It is painfully clear that the continuation of his presidency relies now entirely on the willingness of the fujimoristas to keep him there. PPK will likely offer the fujimoristas an even greater share of the institutional power they already have in exchange for keeping him in office. This is not the outcome that those who voted for PPK in 2016 wanted. He could have refused to use the pardon as a bargaining chip and then allowed his vice president to take office. Instead, he chose to save his presidency by striking a pact that makes not only his presidency—but also Peru’s democracy—a hostage to the fujimoristas’ political calculations.”

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