Hand Gesture by Peru's New President Could Signal Change in Economic Policies

When asked to swear his commitment to fulfill his duties as the new president of Peru on July 28th, Humala Ollanta chose to place his hand not on the current constitution, as is traditionally the case, but on the previous version that was approved in 1979. With this symbolic gesture, President Ollanta opened a debate about constitutionalism and democracy in the Americas and also sent an important political message: he would distance himself from the economic and political guidelines that were delineated in the 1993 constitution.

KEY CONCLUSIONS

This gesture was a direct response to the central tension traversing Peruvian politics: how to maintain the macroeconomic success while also addressing a variety of concerns such as environmental laws; the widening inequality gap; and the weakening of democratic checks and balances.

President Ollanta’s main challenge will be to respond to the growing social discontent while maintaining the economic achievements of recent years, and reinvigorate the people’s belief in democratic institutions.

ANALYSIS

While this gesture might come as a surprise for the casual observer, given Peru’s remarkable economic performance in recent years, it was, in fact, a direct response to the central tension traversing Peruvian politics today: how to maintain the macroeconomic success while also addressing a variety of concerns such as the need to enforce environmental laws while accounting for the concerns of the indigenous population; the widening of the inequality gap; and the weakening of democratic checks and balances.

The shunned 1993 constitution was written by the “Democratic Constituent Congress” convened by then-President Alberto Fujimori after he had forcefully closed Congress and conducted what came to be known as the “self-coup.” Although the 1993 constitution was approved by a public referendum, it has been criticized because of the illegitimate constitution-making process that produced it, and because many of its clauses are perceived to be a direct response to the political interests of Mr. Fujimori (such as the introduction of the presidential reelection, prohibited until then).

As a result of President Ollanta’s gesture, an interesting debate has taken place in Peru: some have argued that a constitutional reform would further contribute to Peru’s institutional instability, as they place the institutionalization of constitutions–a process that takes place depending of their permanence through time–as their paramount contribution. Others, on the other hand, claim that evaluating both the social contract represented by the constitution-making process and the democratic qualifications of the institutional framework designed by the charter are essential, and that, as such, a reform of some sort is probably convenient.

This is, by no means, merely an academic debate for constitutionalists. The economic development model most closely associated with the 1993 constitution has become both the greatest success and the biggest cleavage in contemporary Peru for many reasons. One is that it strictly limits the state’s capacities to directly invest in economic enterprises. It was also a key tool of both the Fujimori and García governments to implement a neo-liberal model of development, largely based in allowing foreign investment to exploit Peru’s extensive natural resources. The generous concessions to multinational industries in the extraction of minerals, hydrocarbons, wood and seafood has resulted in a complicated picture: it has tripled Peru’s GDP in the last ten years, while it has pushed back the inequality indexes to numbers seen four decades ago.

This tendency, naturally, had immediate repercussions in Peruvian politics: the country has witnessed a steady increase in social conflicts led by indigenous people who claim their rights (guaranteed both by international treaties and national laws) have been ignored, and by social movements demanding better redistribution policies. The contentious attitude towards social protest taken by former President Alan García resulted in a most unusual scenario: when his term ended in July, Peru’s macro-economic numbers were the best in decades, but his approval ratings were below 30%.

President Ollanta’s main challenge will be, then, to respond to the growing social discontent while maintaining the economic achievements of recent years. He will also need to reinvigorate the people’s belief in democratic institutions, such as Congress and political parties, which are widely seen as corrupt and ineffective. And he will have to decide if embarking on a new constitution-making exercise is the right approach to do so.



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