12 April 2022 12:56:09 IST

A management and technology professional with 17 years of experience at Big-4 business consulting firms, and seven years of experience in high-technology manufacturing, Rajkamal Rao is a results-driven strategy expert. A US citizen with OCI (Overseas Citizen of India) privileges that allow him to live and work in India, he divides his time between the two countries. Rao heads Rao Advisors, a firm that counsels students aspiring to study in the United States on ways to maximise their return on investment. He lives with his wife and son in Texas. Rao has been a columnist for from the year the website was launched, in 2015, and writes regularly for BusinessLine as well. Twitter: @rajkamalrao

Economic growth slumps as leadership crisis continues in Peru

Peruvian President Pedro Castillo survived an impeachment vote in Congress with only 55 votes in favour out of the 140 seats total.

Last July, Pedro Castillo was swept into Peru's presidential mansion after promising a clean government. For 36 years, the country has been known for frequent ousters of its top leaders because of corruption. Castillo had campaigned on an anti-poverty platform to strengthen education and health services for the country's poor.

But the new president's promise quickly fizzled out. Established politicians who joined his cabinet turned out to be either not trustworthy or corrupt themselves. Castillo resorted to firing minister after minister until he completed his fourth cabinet reshuffle in under six months, a Peruvian record.

People were still unhappy with his governance and organised public rallies in Lima, the capital, asking for his resignation. They were protesting violently over the rising prices of fuel and food. These problems have been exacerbated worldwide because of Russia's war on Ukraine. Castillo responded by imposing curfews that protesters ignored. Many were arrested.

Historical context

Last week, the opposition pressed forward a no-confidence motion to impeach him — the second in just eight months —on charges of corruption and incapacity. But Castillo was unmoved. "I shall always squarely face the nation… because I am subject to the rules of due process," Castillo said at the beginning of the impeachment drama.

Eighty-seven votes were needed to impeach, but Castillo easily managed to survive as no more than 54 legislators voted against him, with 19 members abstaining rather than voting. Abstinence gives these politicians a chance to make backroom deals with Castillo to serve in positions of power and influence. It is a result that Pakistan Prime Minister Imran Khan would have loved to get in his own struggles to stay in office.

Peru, a mid-sized country in western Southern America, is known for its tourist attractions and mountainous hiking trails, such as Machu Picchu, a site of ancient Inca ruins located about 50 miles northwest of Cuzco. It is a sparsely populated nation bordering Columbia to the northeast and the vast country of Brazil to the east.

The snow-capped Andes mountains run north-south, but the country's north-eastern tip is very close to the equator. The Pacific Ocean forms its western border.

Peruvian civilizations go back 10,000 years and, as such, constitute one of the oldest countries in the world. Peru's diverse geography and rich soil are home to many natural resources, including gold, silver, copper, zinc, lead, and iron. There are untapped reserves of oil and natural gas. But chronic mismanagement of its wealth has resulted in Peru remaining one of the world's poorest countries.

Last week, to appeal directly to the people and bypass working with politicians, Castillo offered to push a referendum to give his parliament the authority to rewrite Peru’s constitution. Doing so would give him more powers to redistribute mining profits to the people and reinvigorate his campaign promises of helping the poor.

For a country with such a long human history, it was only in 1979 that Peru adopted its current system of democratic government — as a unitary presidential republic with a multi-party system. But adopting such a government is one thing; successfully executing it is another.

Game of thrones

One of Peru's worst periods occurred during the reign of former president Alberto Fujimori. A Japanese-origin mathematician who turned politician, Fujimori took office in 1990 when Peruvian inflation was 7,650 per cent. He implemented draconian measures, including devaluing the Sol, its currency, by 200 per cent. Within a year, the inflation rate dropped to 139 per cent, still much too high.

Fujimori saw that ruling with an iron hand could help and took this lesson too far. He became a dictator, dissolving Congress in April 1992 to have total control of the government, eliminating the constitution, and calling for new congressional elections. People in the tribal regions protested and mounted insurgencies, which he quelled by employing disproportionate force.

Human rights organisations documented scores of violent treatment of prisoners, but these did not stop Fujimori from asserting even more power. In November 2000, Fujimori resigned from office and went to Japan in self-imposed exile, avoiding prosecution for human rights violations and corruption charges by the new Peruvian authorities.

When countries with rich resources falter, the rest of the world is eager to exploit their weaknesses for their benefit. Minerals-hungry China, always keen to add resource pools to its needs, has invested over $15 billion in Peru's mining sector since 2009. China has quickly emerged to be Peru's second-largest foreign investor. The UK remains the country's largest foreign investor.

The next few months will be critical as politicians strategise to assemble coalitions to remain in power. In the meantime, it is the commoner who suffers, and for the average Peruvian, nothing that is playing out is new. Like in Pakistan, where no Prime Minister has ever completed a full five-year term since its independence, Peru's situation is the ongoing tragedy to which its citizens have become accustomed.