Keiko Fujimori and Peru’s China Challenge
The new president can also expect to contend with the left’s threats to democracy.
By Mary Anastasia O’Grady
President-elect Keiko Fujimori in Lima, Peru, July 16. Ernesto Benavides/Agence France-Presse/Getty ImagesThe U.S. will pick up another South American ally on Tuesday when Peru swears in center-right Keiko Fujimori as president.
With the presence of communist China growing in the country alongside a boom in transnational organized crime, the change in leadership comes none too soon for liberal democracy in the Western Hemisphere.
How much progress against criminal syndicates and Chinese threats to Peruvian sovereignty can Ms. Fujimori be expected to make amid Peru’s notoriously corrupt political economy?
That may depend heavily on her commitment to the cause and her smart use of political capital.
Powerful interests with deep pockets are lined up against her.
Ms. Fujimori will be Peru’s eighth president in eight years and only the second during that time elected to the job.
The good news is that on Friday a new Congress was also sworn in and this one is bicameral.
A senate, the first in more than 30 years, could provide stability to the political system.
The new president will need it.
Peru’s 1990s shift toward market economics and its stable currency have generated gains for millions.
From 2000 through 2019 the poverty rate fell from 50% to less than 21%.
Covid-19 stole some of that progress, but the advancements remain irrefutable.
This is an economic liberalization story.
But the intellectual descendants of the Maoist group Shining Path haven’t given up.
Ms. Fujimori won the June runoff election against the hard-left Roberto Sánchez by the narrowest of margins.
His side is sore and unlikely to abandon its extremism while waiting for Ms. Fujimori to serve out her five-year term.
To avoid a descent into chaos like what Bolivia has experienced under the militancy of Evo Morales, Peru’s courts, Congress and military will have to uphold the rule of law.
She has been out of elective office for 15 years.
But she has spent that time directing the legislative agenda of her party, Popular Force, while campaigning for the presidency.
This was her fourth run for the office.
Her roots are populist, but she has become more attuned to the importance of property rights in driving capital formation and development.
Some 60% of Peru’s exports are from mining, and Ms. Fujimori sees greater potential.
She has promised to clear the regulatory way for more investment in mineral extraction and to offer tax incentives.
To counter opposition from environmentalists and regional political bosses, she wants 40% of mining revenue to remain in local communities.
The antidevelopment crowd is already warning of social “conflicts.”
It could get ugly—more so if she decides to do what’s necessary to end illegal gold-mining operations on private property, which allegedly fund political campaigns.
Later this year Peru expects a severe El Niño, which could damage fishing stocks, bring heavy rains in the north of the country, and cause a drought in the south.
Peru’s Congress has already budgeted $2.8 billion for infrastructure preparedness and emergency aid to handle what is forecast to be one of the worst weather events in the country in decades.
The public will hold Ms. Fujimori accountable for the government’s response.
As El Niño recedes next year Ms. Fujimori will be under pressure to show she can deliver on other issues.
Her pledge to restore public security means taking on the organized-crime networks behind an epidemic of extortion.
Shakedowns are no longer someone else’s problem.
They’re hitting home across the socioeconomic spectrum.
There’s a debate about whether large corporations quietly pay off extortionists.
But an estimated 70% of Peruvian employment is in the informal economy, where small and medium-size businesses operate in cash.
This is where extortion rackets have expanded since Venezuelan gangs like Tren de Aragua moved into the country and, finding no one to stop them, dug in their claws.
So far Peru’s response to this invasion has been “like firefighters with no time to plan,” Dardo López-Dolz, a former vice minister of the interior, told me in a telephone interview last week.
Noting that Peru has had 15 interior ministers in the past five years, Mr. López-Dolz, now a political-risk adviser based in Texas, believes Peru can defeat criminality only if it tackles the problem strategically.
This calls for a full-time office designated to rebuild a professional intelligence agency that works.
In recent years, China has poured billions into mining and infrastructure projects in Peru like the Port of Chancay.
But there’s no such thing as a privately controlled Chinese company, and Beijing’s interest in the region is more than economic.
It’s also a way to challenge U.S. hegemony in the hemisphere.
China is known to throw its weight around in Lima to influence business and politics.
The best way to counter Chinese influence would be greater U.S. investment.
But American corporations are prohibited from paying bribes, and they want judicial security.
Add solving those problems to Ms. Fujimori’s to-do list.
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