Tuesday, June 7, 2011

Humala Victory Causes Peruvian Stocks to Plunge

The Peruvian election results are in, and it’s official: Ollanta Humala will take office as Peru’s president on July 28. With 95% of the vote counted, his victory is assured (51.7% vs. 48.3%).  On Monday afternoon, Keiko ceded victory to her rival, calling for an end to months of bitter politicking between the two, according to La Republica.

The international community has also recognized Humala’s triumph, albeit with some variation in tone. At a meeting of the Organization of American States in El Salvador yesterday, State Department official Arturo Valenzuela told reporters that the U.S. is “willing to continue to work with him, just as we worked with the (current) Peruvian authorities." Brazil’s reaction, on the other hand, was predictably more congratulatory. As Mercopress reports, Brazil’s government openly celebrated Humala’s victory, and has allegedly invited the president elect to Brasilia before the inauguration. 

Despite the congratulations, investors continue to eye the left-wing Humala with skepticism. With the stock market in flux, pressure is mounting on him to name his economic team, in order to signal to markets that he plans on managing the economy responsibly. Reuters has very interesting “who ’s who” of Humala’s current economic advisors, with a special focus on each one’s ideology and political leanings. The most well known of these is former central bank director Kurt Borneo, who originally worked on Alejandro Toledo’s campaign in the first round of elections.

Perhaps as a foreshadowing of this appointment, Borneo himself delivered a sharp rebuke to investors speculating against Peru on Monday, insisting that Humala will adhere to responsible fiscal and monetary policies.

As of yet there’s no word of when the announcement might occur, but it is likely that Humala will move swiftly in the coming days, in order to avoid further economic turmoil. According to the Wall Street Journal, the election results caused Peruvian stocks to fall a record 12.5% on Monday.

More on what Humala’s victory could mean for Peru can be found here, in an informative Al-Jazeera English interview with WOLA Senior Fellow Jo-Marie Burt.

News Briefs:

·         Mexican poet and activist Javier Sicilia kicked off his latest anti-violence protest on Saturday in Paloma de Paz, Cuernavaca. According to El Universal, Sicilia is leading a march that will wind its way through 12 cities in central and northern Mexico, ending in Ciudad Juarez. So far the caravan has 500 participants, many of whom are relatives of victims of violence. In Sicilia’s much-publicized “No Mas Sangre” protests in May, his coalition demanded the resignation of Secretary of Public Security Genaro Garcia Luna, one of the architects of President Felipe Calderon’s crime policy. Although the government denied the demand, the incident put Garcia Luna –who many consider corrupt–under tighter scrutiny. Thus far, the protest has not put forth any specific demands, except for a sign of support from Calderon.
·         Just the Facts has the latest on UNASUR’s new Center of Strategic Studies of Defense. According to Lucila Santos, the Center has been presented with “a hint of anti-imperialism.”
·         In Nexos, Jose Merino recently wrote an interesting analysis of official homicide statistics, and argues that where Calderon has sent troops to improve security, violence has actually been made worse. In a statistical study, Merino takes data from INEGI, the National Public Security System, and the official database of homicides related to organized crime to look at violence trends across the  country. According to him, if Calderon had not ordered military operations against the drug cartels, the official body count in Mexico’s “drug war” would be as much as 25% lower. For an English translation, visit InSight.
·         The Washington Post published an editorial on Sunday calling on Congress to “free” the Colombian FTA. No mention of labor or human rights concerns.
·         Hugo Chavez and Dilma Rousseff met on Monday to discuss a variety of cooperation efforts, including a joint-financed oil refinery in the Brazilian state of Pernambuco. According to the Wall Street Journal, the two leaders signed agreements on energy and oil infrastructure development, and hammered out the details of Brazilian assistance in structuring a Venezuelan housing program aimed at building two million new homes by 2017.
·         At a series of UN Climate Change talks that began this week, the Bolivian government attempted to build support for a tax on international financial transactions, the proceeds of which would help fund $100 billion in climate change aid that developed nations have committed to providing by 2020. According to Bolivia’s representative, the proposal would allow countries could to charge a 0.01% tax on any money coming in from abroad for any transaction.
·         According to El Tiempo, Admiral Edgar Cely, the commander of Colombian armed forces, believes the FARC are increasingly depending on the use of clandestine urban guerrillas (known as the Bolivarian militia) in their attacks. Because of their increased mobility, the rise of these groups may have the potential to bring the heart of the conflict back into Colombian cities.
·         Former Tijuana Mayor Jorge Hank Rhon was arrested over the weekend after the army said it found 88 firearms and nearly 10,000 rounds of ammunition in his home, the Washington Post reports. Although he has long been accused of working closely with the Tijuana Cartel, no formal criminal charges have ever successfully been leveled against him. For this reason, some are questioning if there is a political motive for the arrest.
·         Guatemala’s elPeriodico has the most recent poll numbers regarding the congressional side of upcoming elections in that country. If elections were held tomorrow, the centre-right Patriot Party would get the largest bloc in Congress, with 37.3 percent of respondents favoring the PP’s legislative candidates. Otto Perez Molina, the PP candidate for President, is widely expected to win September’s elections. 

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