In Peru, PPK’s honeymoon is over

Patricio Navia

Buenos Aires Herald, March 24, 2017

 

Peruvian President Pedro Pablo Kuczynski’s (PPK) honeymoon has abruptly ended. Eight months into his administration, the 78-year old economist has a 32-percent approval rating. The government’s slow response to the heavy rains and mudslides that have taken more than 80 lives and caused millions of dollars in damage have further eroded his popularity. The legal case against Vice-President Martín Vizacarra, for his role in helping rescue a construction company that had won the bid to build the new Cusco airport, has also fed suspicions of wrongdoing. Though downward trends in approval ratings are common — especially in Peru — the president’s slow response to the issues at hand threatens to limit his ability to carry out his ambitious reform agenda.

 

When he surprisingly won the presidential runoff in June, 2016, PPK’s victory was received with enthusiasm by the international community. He narrowly defeated Keiko Fujimori, the daughter of former president Alberto Fujimori who first implemented market-friendly reforms in the 1990s but also undermined democracy and led a corrupt government while in power. Keiko Fujimori campaigned trying to both distance herself from her father (who is serving time in jail for human rights violations and corruption) and to connect with those Peruvians who have good memories of her father’s administration. Keiko surrounded herself with some of her father’s former associates and PPK won the support of leftists who disliked his market-friendly policies but strongly opposed what Keiko Fujimori represents. Thus, among two market-friendly candidates, the left ended up throwing its support behind PPK and that made him president.

 

After taking office, PPK engaged himself in an ambitious reform agenda to make Peru more competitive. Though Keiko Fujimori’s Popular Force controls a majority in Congress, PPK secured special decree powers and, by the end of 2016, had sent a series of bills that could only be voted up or down by Congress — not amended. Those bills included growth-inducing tax reforms and state modernisation initiatives aimed at promoting social inclusion and improving the efficiency of the public sector. Since he anticipated that his honeymoon would eventually end, PPK rushed to pass through Congress reforms that would allow him to govern for the rest of the term.

 

Though the president knew that his approval would eventually fall —and thus, the opposition-controlled Congress would be less amenable to collaborate with his legislative agenda — the speed at which it has fallen has surprised everyone.

 

Special favours

The scandal produced by the investigation in Brazil into illegal campaign contributions made by two large construction companies to politicians in Brazil and elsewhere in Latin America has also reached Peru. Revelations about payments made to high officials in the Alejandro Toledo (2001-2006), Alan García (2006-2011) and Ollanta Humala (2011-2016) government have dominated political news in that country.

PPK quickly reacted by proposing that anyone involved in a corruption scandal should be barred from public sector employment for life. Since PPK served as a prime minister (President of the Ministers Council) and finance minister under Toledo, the accusations against his former boss were especially problematic for him. When the prosecutor’s office issued an international arrest warrant for Toledo, who resides in the United States, PPK further distanced himself from his former boss.

 

The strategy would have worked, but new revelations about special favours to a construction company that, in 2014, won the bid to build the new Cusco airport have come back to haunt PPK’s strong stance against corrupt practices. In late 2016, Vice-President, Martín Vizcarra, who also serves as transport minister intervened in favour of the private construction company by securing a government-guaranteed loan to help the firm build the airport. The company thus was rescued by the government to build an airport that, when in service, will make generate millions in profits. Though the government argued that it was better to help the company carry out the project rather than start a new bidding process that would delay the construction of the airport, suspicions of wrongdoing arose when the news was made public and it was revealed the sister of Fernando Zavala, the president of PPK’s Ministers Council worked for the company. Now, the opposition-controlled Congress has begun impeachment proceedings against Vizcarra.

 

The heavy rains and mudslides that hit Peru in the past two weeks have delayed the accusation from progressing, but the uproar against the government continues. Since the government was also slow to respond to that emergency, the damage to PPK has only got worse. The president’s laidback style to governing and his strong reliance on his Cabinet ministers — including Zavala and Vizcarra, who are now under criticism for their alleged role in the Cusco airport scandal — have further weakened his image and provided ammunition to those who have criticised PPK and accused him of being too old to govern Peru effectively.

 

Since PPK’s approval rating is in the low 30s, the president can still reverse the trend and gain popular support to be able to more effectively negotiate with Congress to advance his agenda. Yet, PPK needs to react fast to avoid finding himself on the same path of his predecessors, whose rapid decline in approval ratings rendered them lame duck presidents early in their administrations.