Kuczynski Must Get Political

˙ Voces

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Last month, former finance minister, prime minister, and World Bank official Pedro Pablo Kuczynski (known universally in Peru as PPK) won the Peruvian presidency by a slim margin over his opponent, Keiko Fujimori.  With over 18 million votes cast, Kuczynski won by just over 41 thousand votes—less than a quarter of one percent. The election was, by a considerable margin, the closest in the country’s history.

Today, July 28th, PPK takes office, and from day one he will walk a narrow and delicate path. He must govern with the weak mandate of a “default” candidate. He must negotiate with an opposition congress, with Fujimori’s party holding 73 of 130 seats and even the leftist party, the Broad Front, holding more seats than his party. And he must pursue policies that diversify the economy, balance social and economic concerns, fight crime and corruption, and reform state institutions — all while maintaining economic growth.

For many observers, Kuczynski stands out as a pragmatist, a technocrat, and an able manager. To succeed as President, however, he must also prove to be an effective politician capable of building coalitions, communicating with voters, and mobilizing support across the country. In recent history, Peru has consistently been led by Presidents whose economic records are far better than their approval rates would suggest. For all of Peru’s gains in GDP, many voters have felt left out of the prosperity—and of the political process. To have a lasting impact as president, Kuczynski has to do better.


The accidental president

PPK’s biggest challenge is a lack of any real mandate. He won the presidency by virtue of not being his opponent. Keiko is the daughter of one of Peru’s most divisive figures: former strongman Alberto Fujimori, who is currently serving 25 years in prison for corruption and human rights abuses. For some Peruvians, Fujimorismo means strong leadership, economic growth, and law and order. But many others saw Keiko’s candidacy as a friendly face on the same corrupt, authoritarian machine. Kuczynski was only elected because a chaotic campaign season full of unexpected twists and turns left him—to the surprise of many—as the last opponent standing.

And while Keiko lost the presidency, her party—the Popular Force (FP)—fared much better down ballot. The Fujimoristas won control of Congress, taking 56% of seats—the first time since Keiko’s father, 21 years ago, that any party has enjoyed a majority. This was in part made possible by Peru’s electoral rules. Kuczynski’s party, Peruanos Por el Kambio (Peruvians for Change, also abbreviated as PPK) won 18 seats, less than 14%.  This imbalance no doubt worries Kuczynski. Should the Congress choose to block his agenda, his government would have little recourse. Some experts anticipate Kuczynski will still have leverage and the FP will cooperate so as not to seem obstructionist, but their doing so would be unusual for a legislative majority in divided government.

Still, Kuczynski’s agenda is not necessarily dead on arrival. If he is astute, and works quickly to build bridges and negotiate a working relationship with the FP, political and personal acrimony can be overcome or at least reduced. Moreover, Fujimorismo is not a monolith, and Kuczynski could try and take advantage of these internal divisions. Not all FP members in Congress are loyal to Keiko, with some irked by how she moderated considerably from the party line and still lost the presidency. The party is split between her supporters and those who prefer her more militantly right-wing brother Kenji, also a Congressman, who didn’t even vote for his sister in the election.

In addition, Peru’s left, which came close to making it to the 2nd round, clearly expects concessions from Kuczynski, as many of them voted for him to deny Fujimori the presidency. If he fails to meet their expectations—especially on the environment and on prosecuting Fujimoristas for corruption— he may find himself subject of heavy criticism from both sides.


Peru needs a leader, not just a wonk-in-chief

To walk this line, Kuczynski must work quickly to build political alliances and turn his image as a common-sense manager and effective problem solver into a political vision. As Peruvian political scientist Alberto Vergara explains, “Peru is well-managed, not well governed,” and the paradox of sound macroeconomic management paired with political discontent and dysfunction has become deeply engrained. Kuczynski must find a way to break this pattern and sell his pragmatic inclinations as part of a broader and ideology.

Many of his economic policies fit the bill, and the country’s strong consensus on macroeconomic fundamentals gives him a platform from which to launch his appeal. His proposals to reduce informality by offering tax and business incentives, labor protection, and worker training programs should be a fairly easy sell, and his plan to lower the value-added tax (VAT) from 18 to 15 percent is sure to be popular—although the Fujimoristas may reject it. He also seeks to revamp the national police force, reflecting Peruvians’ widespread concerns with crime and security. These are good ideas, but they must be effectively sold to congress and to voters. It remains to be seen if Kuczynski has the necessary political acumen and the stomach for the hard-nosed negotiations to come.

The biggest and most telling uncertainty is how his administration handles corruption. Since Alberto Fujimori was forced from power over massive bribes and embezzlement, Peruvians have consistently seen their leaders as corrupt. The last three presidents—Alejandro Toledo, Alan García, and Ollanta Humala—have all been embarrassed and discredited by corruption scandals, although generally without convictions to date. Surveys show that confidence in Peruvian institutions is among the lowest in the hemisphere.

On the one hand, Kuczynski and his party come into power with much to gain by fighting corruption. If his new Ministers of Justice and the Interior—Marisol Pérez Tello and Carlos Basombrio, respectively—are able to make strides in strengthening institutions, Kuczynski’s government could earn the loyalty of Peruvians frustrated with perceived impunity. On the other hand, fighting corruption usually means prosecuting and jailing high-profile figures, and taking on powerful political interests that will fight back.  A corruption fight would be an uphill battle, and would set off a series of political chain reactions, many of which Kuczynski may not be able to control or handle effectively.  

Through all of these challenges, even a few strategic missteps, political miscalculations, or tone-deaf decisions could undermine the government. To be both a good manager and a good politician may simply be too much to ask, and Peru may face another five years of economic prosperity coupled with political malaise. Yet it bears repeating that Kuczynski—who has been played various roles in the Peruvian government since the 1960s—made it to the presidency through perseverance and an extraordinary combination of timing and luck. His streak may not be over.