Elections for regional and municipal presidents began Oct. 5, but the results will not be ready until early November. Many of the country's regions will vote within the next 30 days for a second round. If the current trends hold, only a few of Peru's 25 regions will have elected a member of a national party. The rest are from new, more radical parties that reflect voter dissatisfaction with Humala's Peruvian Nationalist party.
For example, Gregorio Santos of the Social Affirmation Movement, who led protests against a large mining project, was re-elected regional president. He also faces corruption charges of alleged criminal conspiracy, receiving a bribe and aggravated collusion against the State. Moquegua's new regional president, Jaime Rodriguez from the Kausachum Moquegua Regional Movement, is seen as a radical. During his campaign, he admitted to misappropriating public funds to help the poor and has a plan to prioritize limited water supplies for agriculture development. Loreto regional President Fernando Melendez of the Loreto Integration party is being investigated for money laundering. Ucayali regional President Manuel Gambini, who hails from the Ucayali Change party, supports illegal mining and had his house raided over money laundering charges. Wilfredo Oscorima, a renowned leftist from the Ayacucho Rebirth Alliance was elected regional president of Ayacucho.
The list goes on. In Puno, current results indicate a second round between Juan Luque and Walter Aduviri. Luque has been charged with misappropriation of funds, and Aduviri has led violent protests against Bear Creek silver mine and supports illegal mining in the area. In Madre de Dios region, Luis Otzuka of the Salazar Democracy party has moved into the second round having participated in strikes with illegal and informal miners in the area, though his competitor also supports illegal mining. In Apurimac region, the leader going into the second round, Michael Martinez, has promised to take a tougher stance on large-scale mining projects and to defend local economic development. In Ancash, Waldo Rios will participate in the second round of elections — he previously served a sentence for taking money from Vladimiro Montesinos, who was the head of Peru's intelligence body during former President Alberto Fujimori's administration. In Junin region, both candidates — Vladimir Cerron (Free Peru) and Angel Unchupaico (Sustainable Junin) — face corruption charges.
A Contradictory Image
The results show that emerging, radical parties are gaining popularity — a foreboding prospect for Lima, since many of these parties favor the sustainable use of resources, particularly water and mineral deposits, at Lima's expense. Of course, this is not a new trend in Peruvian politics. Fringe parties started gaining notoriety in 2006 and 2010, when only six candidates from national parties were elected. But Humala's political decisions, which contradict his image as a champion for social inclusion, have emboldened these parties. In 2005, he founded the Peru Nationalist party. It identified with indigenous communities, national pride, social inclusion and development for all of Peru. He won 31.7 percent of the popular vote in the first round of general elections in 2011, distinguishing himself as a far-left candidate, and eventually became president.
When Humala assumed office, international business and investors were worried about how far left he would take Peru's economy. At the time, Stratfor forecast that Humala would not pursue radical policies, as his relatively small base of support would have to cooperate with other parties to govern. Moreover, he took power during a time of relative prosperity.
Three years later, Humala has proved to be a market-friendly leader who works to strike a balance between big business interests and national development. In the beginning of his term, Humala did things that seemed to benefit local communities. He pushed to further decentralize the government by enhancing coordination with regional and local governments. He also advocated more local control over budget spending and more national services to promote local development. He also opened the possibility of reviewing royalties and cannon schemes currently in place to give greater mining revenues to benefit regional education and social programs. He oversaw the approval and the implementation of the Prior Indigenous Consult Law that requires the government to discuss with local populations plans to carry out extractive projects that would affect their area. Last, he promoted dialogue for local communities, national government and businesses to hash out their differences.
However, over the past 12-18 months, Humala has had to abandon those policies for ones that support large business, a shift owed partly to the global economic slowdown, domestic security issues and concerns over his ability to govern. He has cracked down on illegal mining, primarily in Madre de Dios, Puno and Ucayali. He has slowed his decentralization campaign in the wake of corruption and criminal cases brought against regional and local leaders. Most recently, Humala decided to confront a slowing economy by sponsoring an economic stimulus package to create more attractive conditions for mining companies to produce and invest in Peru.
An Opportunity in Elections
Humala's about-face has left many of his more extreme supporters feeling abandoned. The Oct. 5 regional elections provided just the opportunity for regions to express their disapproval of national policies and expose the deep economic and social divides in the country.
And once again, the future of the country's mining projects and investment has come into question. Mining is perhaps then most important aspect of the Peruvian economy. It accounts for more than half of the country's exports, and so the government knows it must keep mining productive.
But foreign investment into mining projects is starting to slow. In fact, investment has fallen by 6 percent since 2013, totaling only $5.56 billion in 2014. Eighteen of the 22 mining regions have seen a decline; Apurimac, Junin and Cajamarca have been hit the hardest. Investors still see the country as an attractive destination generally, but they are now waiting to see how the political situation plays out before deciding what to do.
With more radical local leaders in positions of power, there is a higher likelihood that local groups and mining companies will clash over potential projects. Humala will find himself in the middle of these confrontations as business look to him to manage their interests. In the past, Humala has been able to strike a balance through dialogue and the occasional issuing of warrants against local leaders for suspicious or illegal activity. But many of the regional leaders already have legal issues, making issuing warrants a less useful tactic. If he cracks down harder and arrests them, he could incite more unrest. For now, Humala will have to rely on dialogue — even though many regions now find themselves in a stronger bargaining position.
