Leftist Castillo faces divided nation as Peru’s next president

(Bloomberg) – Peru Pedro Castillo, a rural labor activist from a Marxist party, will take the reins of a deeply divided country after being declared president-elect after weeks of counting, prosecution and allegations of fraud.

The result, announced Monday evening by the Peruvian electoral authorities, will help dispel the uncertainty that has gripped the Andean nation since the second round of June 6. But that leaves Castillo, a highland teacher with no previous national politics experience, with the daunting challenge of trying to bridge an array of political, economic and geographic divisions exposed by the election.

Castillo, 51, who was virtually unknown six months ago, narrowly defeated right-wing candidate Keiko Fujimori, leader of the country’s most powerful political clan. After alleging fraud and calling for numerous votes to be quashed, Fujimori said she would accept the authorities’ decision even though she called her opponent’s proclamation “illegitimate”.

Speaking immediately after the decision, Castillo thanked the Peruvian people and called for national unity, sending a special message to his main political opponent.

“I call on Ms. Fujimori not to erect more barriers on this path,” he told a crowd of supporters from a balcony in a building in downtown Lima. “Let’s no longer have obstacles to move this country forward.

He quickly received congratulations from Mexican President Andres Manuel Lopez Obrador and Secretary General of the Organization of American States Luis Almagro.

READ MORE: Elites tremble as Peruvian left expresses anger over rising inequality

When he takes office on July 28, Castillo will inherit a traumatized nation. Peru has suffered the highest death rate in the world from Covid as well as a deeper economic slump than any other major economy in the Americas. The country has also experienced exceptional political volatility, with three presidents in just over a week last year.

Castillo ran on the slogan “More poor in a rich country” which means that the nation’s vast mineral wealth should benefit ordinary people. He swept through the rural and Andean regions of the country, while Fujimori won the capital Lima and the coastal towns to the north.

He says he will focus on education and health, making him the face of the resurgent left in Latin America and a symbol of growing disenchantment with elites in the wake of the pandemic’s ravages.

Investor fears

Castillo won by 50.1% to 49.9%, and Fujimori’s party alleged irregularities and attempted to overturn votes deemed fraudulent. The United States and the European Union said the ballot was clean.

His election initially scared investors, but the country’s bonds and currency rallied after he appointed mainstream economists as advisers and pledged to respect the autonomy of the central bank.

Read more: Peru’s Castillo has a Marxist and a fiscal hawk in the inner circle

Its chief economic adviser, Pedro Francke, has called for fiscal prudence and inflation targeting, and opposes the nationalization of companies. But the Marxists of Castillo’s Free Peru party will try to get him to follow a more radical path.

Castillo’s ability to govern is likely to be hampered by his limited support in Congress, which is dominated by the center-right. He will face not only opposition but the very real threat of impeachment, which was used to topple former President Martin Vizcarra.

His narrow victory, however, represents one of the most meteoric political journeys in recent history. Castillo has gone from a little-known union organizer just a few months ago to the head of a country of 32 million people struggling with one of the worst periods in its history.

Disgust of voters

His promises to raise corporate taxes, curb big business and inject 20% of economic output into social welfare struck a chord with the rural poor. But those same policies, and the roots of his political party, worried investors, accustomed to Peru being one of the continent’s most dynamic and reliable economies, even in the midst of political crises.

While his Peru Free Party was founded by a Marxist neurosurgeon who praised autocrats like Cuba’s Fidel Castro, Castillo tried to distance himself from the party’s radicals.

During the campaign, Castillo crisscrossed the country wearing a large straw hat, riding on horseback at the polls and dancing with his supporters. He carried a giant pencil to signify his interest in education. On April 11, he beat 17 other candidates to win the first round.

(Updates with challenges starting in the second paragraph.)

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