Turmoil Risks Financial Stability Peru Long Took for Granted


The city of Cusco in Peru is usually a busy mecca for international tourists

CUSCO, Peru (AP) — Marco Gonzales traveled from his home in the Peruvian Amazon. To the Andean city of Cusco in 2007 with little more than $20. a smidgen of English and a change of clothes ill-suited to the icy mountain air.

Turmoil Risks Financial Stability Peru Long Took for Granted

He began offering walking tours of the capital of the former Incan Empire in exchange for tips. Along the way he fell in love with a British backpacker, Nathalie Zulauf. And together the couple built a travel business and family.

But now with Peru’s once enviable economic stability it is all in danger of collapsing.

The couple’s company, Bloody Buenos Peru. Which caters mostly to foreign tourists from Britain and elsewhere. Has not seen a customer since December. When protesters blocked access to the ancient ruins of Machu Picchu. To demand the resignation of interim president Dina Bolluarte. . The group canceled reservations months ago, forcing the couple. To dip into savings already depleted by the coronavirus pandemic.

“We’re waiting until March to see if the situation improves.” Said Gonzales, 38, looking at a calendar he no longer bothers to update. “If this is not the case, we have to explore other options, such as closing the business and emigrating. At least we have Nathalie’s family in England. Cusco has much less for others to fall back on.

The city of 450,000, usually a polyglot mecca for foreign travelers, is a ghost town these days. The Plaza de Armas, where women dressed in colorful Andean textiles. Used to pose for snapshots. Now draws protesters playing cat-and-mouse with heavily armored riot police.

Political unrest is nothing new in Peru, which has seen six presidents in the past five years. In 1969, with a military dictatorship in power, Nobel Prize-winning author Mario Vargas. Llosa began his novel “Conversations. In the Cathedral” by posing the now iconic question. “At what precise moment did Peru delude itself?”

For a long time, unemployment was under control. And did not interfere with the sacred cornerstones. Of a free-market economy, such as the original mining industry. Since 2000, Peru’s economy has grown at an average annual rate of 4.4%. Higher than any country in South America – with low inflation and a stable currency. By the time the pandemic hit, poverty had halved.

But the level of violence following the December 7. Impeachment and arrest of President Pedro Castillo for a clumsy. Attempt to shut down Congress — unrest that left 57 civilians dead. And hundreds more injured — has reignited class. And ethnic divisions and many Peruvians feel uncomfortable for a long time. Stability has run its course.

“This dichotomy cannot last,” said Steven Levitsky, a political scientist at Harvard University. And co-author of the 2018 book, “How Democracies Die.” Signs of economic decline are everywhere.

In December – as the political crisis began. The number of foreigners visiting Peru had already fallen. tTo the lowest level since 2009, excluding the two years lost to Covid-19. Operations at three major copper and tin mines were suspended. As highways were blocked or their facilities attacked by protesters.

Peru is the world’s largest exporter of grapes. And protests hit during the harvest Shipments. To a key growing region are up just 4% from a year ago, according to Dario Nunez. Whose company, UVica, has been unable to fulfill orders from US retailers such as Costco and Sam’s Club.

“Peru’s credibility as a brand is starting to suffer,” Nunez said “I don’t see a light at the end of the tunnel.”

Peru’s democratic dysfunction accelerated with Castillo’s surprise election in 2021. A rural school teacher, he rose from obscurity to fill the void of a broken political system. Rampant corruption and deep-seated racism.

His journey from an adobe house in one of Peru’s poorest. Areas to the presidential palace was fueled by anger. At the long-neglected Andean highlands. But once in office, he shuffled his cabinet almost weekly and was dogged. By allegations of corruption that hinged on his inexperience.

Congressional elites, though more discredited than Castillo. Became aggressive, using a vague constitutional power. To seek his impeachment for “moral incapacity.” This triggered Castillo’s move to shut down Congress, which backfired with his arrest. On charges of rebellion — and the ascension to power of Vice President Baluarte.

The current uprising has coalesced around one urgent demand: the exit of Bouluart. Congress could act by mandating early elections but has so far declined. Because lawmakers are reluctant to recuse themselves.

Levitsky, a Harvard professor, said it was too early to know how Peru’s crisis would unfold. One claim of the protesters is that the constitution adopted during the 1990-2000. Authoritarian rule of Alberto Fujimori and which strengthened free-market reforms.

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