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The Peruvian Miracle

9:05 AM, Jan 16, 2013 • By JAIME DAREMBLUM
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In late November and early December, Peruvian business leaders gathered in the industrial city of Arequipa for the 50th Annual Conference of Executives (CADE). When the polling firm Ipsos Apoyo asked CADE attendees whether they approved of the job performance of Peruvian president Ollanta Humala, a remarkable 75 percent said yes.

Ollanta Humala

In other words, a former Hugo Chávez acolyte—who led a failed military coup in 2000, who reportedly received money from Chávez during his 2006 presidential campaign, and whose wife once earned $4,000 per month in “consulting” fees from a pro-Chávez newspaper based in Caracas—now enjoys overwhelming support from the Peruvian business community.

It is a turn of events that few would have predicted seven years ago, when Humala first ran for president. Back in 2006, he literally wore red shirts to highlight his far-left economic views; he vowed to nationalize certain industries; he proposed rewriting the Peruvian constitution; he criticized the American “empire” for alleged violations of international law; and he attacked free-market globalization. “We need to defend our country from being totally globalized,” Humala told the Independent of London in April 2006. “They’re breaking into our sovereignty, weakening our national industries, and most importantly the application of the neo-liberal model hasn’t benefited normal Peruvian families.”

The Humala of 2006 was understandably perceived to be a Chávez-style radical who would transform Peru along the lines of Venezuelan socialism, which is why his first-place finish in the initial round of voting was so alarming to Peruvian investors. Humala ultimately lost in the second round to a centrist, pro-market candidate named Alan García; the final vote was for 52.6 percent for García and 47.4 percent for Humala.

During the García years, Peru became “an extraordinary success story,” as President Obama said at June 2010 Oval Office press conference. With China, now its largest trade partner, gobbling up Peru’s minerals and raw materials (such as copper, iron ore, and zinc), it experienced Chinese-level growth rates. Indeed, over the last decade, Peru expanded more than any other Latin American or Caribbean economy, and it saw wages rise at an annual pace of 6 to 7 percent. Meanwhile, between 2002 and 2011, the national poverty rate was virtually cut in half, dropping from 54.7 percent to 27.8 percent. 

Many Peruvians were afraid that this progress would be endangered by a Humala victory in the 2011 election. While Humala’s campaign message in 2011 was more conciliatory than his message in 2006, he lacked credibility and was widely distrusted. Yet the former army officer insisted that his views had evolved along with his country. “Peru has changed and so have I,” he said.

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