Warning #1 - Peru

This could get ugly

Why a Warning on Peru?

When Castillo made his failed coup attempt on 7 December, I was not super concerned about it. Peru has been experiencing political turmoil for much of the recent past, having six Presidents in six years with four currently under investigation for corruption lends itself to turmoil. I was expecting this to be another period of unrest along the lines of 2020 with some protests, opposition parties would complain, Castillo would be tried, held for a few years and then move to Mexico under political asylum. Rinse and repeat.

Well, it’s been a completely different experience this time. The widespread reach of the protests in December; at least 20 protesters were killed by police or military forces, over 100 roadblocks, and 5 airports closed, all show this unrest is at a different level. Now in January, another 17 protesters were killed on a single day, there are protests and roadblocks in 26 provinces and little new has been heard from the Boularte government. There has been some talk in Peruvian and other press that the protests are being guided or directed by organizations connected to the Sendero Luminoso and/or coca growers and drug traffickers to generate chaos so they can expand growing and trafficking activities. While I certainly can see these groups having a supporting role in protests, I find it unlikely that their reach would extend to encompass all the people and places experiencing significant protests. It seems more likely that Peru’s rural population has finally had enough of being ignored by the government in Lima.

The persistent nature of the protests, poor efforts by the government to address protester concerns, a very rapid escalation in the use of force by police, and the very real possibility of negative impacts on the Peruvian economy make this a very unusual situation.

Possible Impacts

The situation in Peru looks pretty unstable at the moment. As there are so many possible paths this could go, a narrative approach to events of concern may be the best way to go. So let’s start with today’s situation; ex-President Castillo in pre-trial confinement, 50 deaths to date, road blockages in 20+ provinces, national elections projected for April 2024, President Boularte seemingly running out of options for addressing protester’s concerns, the Peruvian Attorney General investigating the President and her Cabinet for human rights violations related to protester deaths, and a Peruvian Congress with a sub-20% approval rate. Where does it go from here?

The darkest scenario has the strikes and blockages taking an increasing economic toll on Peru’s largest export sector, mining (60% of exports), tourism and internal food production. This puts additional investor pressure on the Boularte government to act decisively. As the protesters have no “leadership” with which to talk, that decisive action translates to the use of deadly force by security forces to clear roads and cities. This generates internal and international condemnation, further isolating the Boularte government and raising the stakes for protesters. This leads to a cycle of violence not seen since the days of the Sendero Luminoso in the 1990s. Boularte’s government becomes more untenable as the unrest continues. The Congress attempts to take control of the situation by voting out Boularte but fails due to the lack of a united opposition. Security Forces see the failure of both Bolarte and Congress to govern as too dangerous to allow, so they oust both and call for elections “at a future date.”

Admittedly, there is a low probability of the entire scenario above taking place. But there is a good possibility of some elements coming to pass. The economic element is the real wild card as the economy hasn’t seen significant negative impacts from the past decade or more of governmental unrest. If the blockages continue or widespread strikes impact export production, I can see real pressure being applied in Lima to “fix” the issue. I don’t see a return of United Fruit-like influence over government but I can see economic actors having an oversize impact on actions taken by both Congress and the Boularte administration.

Indications

The Economy

Watch for: Mine closures, long-duration road blockages, national strikes in export industries, food shortages, moves by the Central Bank to prop up growth, debt servicing problems, and statements of concern by major external investors.

Security Forces

Watch for: Outcomes of investigations on the use of force, additional mass casualty protest responses, widespread resignations or replacement of Security Forces leadership, assumption of non-traditional government roles by Security Forces leadership, and civilian leadership withdrawing from security decision-making

Boularte Administration

Watch for: Additional declarations of “states of emergency” and associated restrictions on civil liberties, zero-sum ultimatums given to protestors, increased evidenceless blaming of “illegal miners and narcotraffickers” for protests, increased statements about the role of Bolivia, specifically former President Morales, in destabilizing Southern Peru, and President Boularte’s resignation.

Peruvian Congress

Watch for: Opposition parties blocking legislative efforts, calls for Boularte to resign, votes to impeach Boularte, additional investigations into Boularte’s handling of the protests.

Peruvian People

Watch for: Support for protesters spreading into urban areas, hardening of urban opposition to protests, wide support for nationwide strikes across industries, and calls to replace the Boularte government with something more “effective” in dealing with the protests.

Definitely difficult times ahead for Peru as this situation develops.

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