Peru: 2006 Elections and Issues for Congress
CRS Report for Congress
Peru: 2006 Elections and Issues for Congress
Maureen Taft-Morales
Specialist in Latin American Affairs
Foreign Affairs, Defense, and Trade Division
Summary
Former President Alan Garcia continued his political comeback by being elected
President on June 4, 2006, defeating populist Ollanta Humala. Not only the winning
candidate will have an impact on U.S. relations with Peru: lacking a majority in the
newly-elected Congress, Garcia will have to negotiate with the other parties to pass his
program. Garcia generally favors free market policies. Humala campaigned on an anti-
globalization platform; his alliance won the largest bloc in the legislature but is
splintering before the legislators are even sworn in. Municipal and regional elections
will be held on November 19. Other issues in U.S.-Peruvian relations include trade,
drugs, democracy, and human rights. The two countries signed a free trade agreement.
The Peruvian legislature ratified it in June; the U.S. Congress has held hearings and may
vote on the agreement before fall elections. This report will be updated as warranted.
See also CRS Report RS22391, U.S.-Peru Trade Promotion Agreement, by M. Angeles
Villarreal, and CRS Report RL30918, Peru: Recovery from Crisis, by Maureen
Taft-Morales.
Presidential and Legislative Election Results
Presidential Race. Former President Alan Garcia continued his comeback by
being elected President on June 4, 2006, narrowly defeating populist Ollanta Humala
52.6% to 47.3%. Peru held the first round of national presidential and parliamentary
elections on April 9, 2006; the presidential race was so close that officials did not release
the results for almost a month. Because no candidate won more than 50%, a run-off
election was held between the left-of-center Garcia and Humala, the top two candidates.
Garcia will be inaugurated on July 28 to a five-year term.
Garcia’s earlier presidency (1985-1990), characterized by many observers as
disastrous, was marked by hyper-inflation and a violent guerrilla insurgency, but his party,
APRA, is the most organized in the country. With conservative candidate Lourdes Flores
edged out of the race in the first round, many observers cast Garcia as “the lesser of two
evils” in the second round. Humala, a retired army officer who led an uprising against
then-President Fujimori, espoused nationalist, anti-globalization policies. Garcia took
advantage of a backlash of sentiment against Venezuela’s President Hugo Chávez, who
supported Humala, and, along with Bolivian President Evo Morales, raised fears among
Congressional Research Service ˜ The Library of Congress
middle- and upper-class Peruvians of expropriations such as those that occurred during
the military dictatorship of Gen. Juan Velasco, whom both Chávez and Humala have
praised. Many observers were concerned that Humala had authoritarian tendencies.
Legislative Race. There is no run-off for legislative seats. Humala’s alliance won
45 of the 120 seats in the unicameral legislature; Garcia’s 36, and Flores’s 17 seats. The
Alliance for the Future, the party of ex-President Alberto Fujimori (1990-2000) who is
now in Chile awaiting the outcome of his extradition process, won 13 seats, making it the
fourth largest bloc. Fujimori’s daughter, Keiko Fujimori, who says she ran for Congress
at her father’s suggestion, won a seat, and appears to have gained more votes than any of
the other 2,600 legislative candidates. Her stated goal is to see her father exonerated of
the criminal and human rights charges against him.1 The Center Front, led by Valentin2
Paniagua, won five seats. Peru Posible, President Toledo’s party, won only two seats,
as did the National Restoration party. With no party having a majority in the legislature,
coalitions will likely have to be formed to pass legislation. Observers expect Fujimori’s
party to use its bloc as leverage to secure impunity for the ex-president. Humala’s
alliance has already begun to splinter.
The Outgoing Toledo Administration’s Legacy
Current President Alejandro Toledo’s term will end on July 28. Peru under his
administration been characterized by two seemingly contradictory trends: high economic
growth and extremely low popularity of the President. Toledo has presided over one of
the highest economic growth rates in Latin America throughout his term, with 5.9%
growth in 2005, and 5% growth expected for 2006,3 in contrast to four years of stagnation
under his predecessors. Economic growth has been driven by the mining sector. Despite
his low level of support, Toledo has pushed through reforms that have increased tax
collection, reduced the pension system’s deficit, and reduced expenditures and the budget
deficit. He negotiated a free trade agreement with the United States and pushed for its
passage before the new congress, with Humala’s anti-free trade bloc, came into office.
The congress passed it 79 to 14 (with 6 abstentions) on June 28. Toledo visited the
United States July 9-12 to promote U.S. ratification of the trade agreement.
In spite of high growth rates, a substantial portion of the population lives in poverty
and is underemployed. Responding to nearly constant, widespread protests by teachers,
farmers, and others for higher wages, Toledo declared several states of emergency. He
started a welfare program in May 2005 that provides monthly subsidies to about 25% of
the 6 million Peruvians living in extreme poverty. Pedro Pablo Kuczynski — then
Economy Minister, now Prime Minister — said in March 2005 that the benefits of
1 Juan Forero, “Fujimori’s Daughter Polishes her Jailed Father’s Image on the Road to Congress
in Peru,” New York Times, April 9, 2006; “Pro-Fujimori coalition advances in Peru Congressional
Election,” Kyodo News, April 10, 2006.
2 Robert Kozak, “Peru’s Election Results Unclear; Markets Up, but Wary,” Dow Jones
Commodities Service, April 10, 2006, and “Peru Politics: Garcia’s Comeback?,” Economist
Intelligence Unit, April 13, 2006.
3 “Country Report: Peru,” Economist Intelligence Unit, Jan. 2006, pp. 5, 10.
economic growth were filtering down to poorer sectors of society. In the first three
quarters of 2005, employment grew 3.5% in Lima and 6.4% in the rest of the country.4
Toledo has been widely criticized as having weak leadership skills, his image has
been damaged by personal issues, and his administration tarnished by corruption charges.
His public support has remained low for most of his term, hovering at around 10% since
2004. Many Peruvians wondered whether he would be able to complete his term. Toledo
denies allegations of corruption. Although the scandals are limited in comparison to the
widespread corruption of the earlier Fujimori administration, they have proved damaging
to Toledo, who came to office as a reformer. Toledo cannot run again because of term
limits. In five years, however, he could run for a second, non-consecutive term.
As Toledo’s successor, Garcia will also be under enormous social pressure to reduce
the level of poverty in Peru and widen the distribution of economic growth. About 54%
of the population lives in poverty, living on less than $58 per month, and 24% in extreme
poverty, living on less than $32 per month.5 Poverty is concentrated in rural and jungle
areas, and among the indigenous population. The wealthiest 20% of the population
receive 53% of the country’s income, while the poorest 20% receive only 3%.6
The President-Elect 7
Alan Garcia’s presidency (1985-1990) was marked by hyper-inflation (an annual rate
above 7,600%) and a violent guerrilla insurgency. He says he has changed, and would no
longer govern as a leftist but as a moderate. His party, APRA, is Peru’s oldest and most
organized. Considered to be a charismatic, skilled orator, Garcia strived to attract young
voters, many of whom do not remember his term as president, and to draw female voters
away from Flores by promising to appoint equal numbers of men and women to his
cabinet and implement equal pay for women. Garcia was elected to Congress in 1980 and
was elected president in 1985, at the age of 36. At his term’s end, Peru was characterized
as being in economic chaos, and Garcia was accused of corruption. When Fujimori
threatened to arrest him in 1992, Garcia went into nine years of self-imposed exile.
Since his political comeback in 2001, he has softened his populist rhetoric. Hoping
to regain credibility with Peru’s business sector, he has pledged to maintain orthodox
macro-economic policies, slash government spending, and promote small and medium
sized businesses. His party voted for the free trade agreement in June, but Garcia recently
said he would renegotiate elements detrimental to Peruvian interests.
4 Ibid, p. 20.
5 U.S. Dept. Of State, Background Note: Peru, March 2006.
6 World Bank, 2005 World Development Indicators, p. 73, March 2005, Washington, DC.
7 Sources include Robert Kozak and Matt Moffett, “Politics and Economics: Populist has Lead
in Peru Election, Runoff is Likely,” Wall Street Journal, April 10,2006; “Peru Politics: Garcia’s
Comeback?,” Economist Intelligence Unit - Viewswire, April 13, 2006; “Peru’s Controversial Ex-
President Garcia Seeks Comeback,” Agence France Presse, April 9, 2006; “Profiles: Peru
Presidential Hopefuls,” BBC News Online, April 10, 2006; “President-elect says Peru to
renegotiate US free trade accord,” BBC Monitoring Americas, July 4, 2006.
Human rights groups reported widespread human rights abuses during the guerrilla
war waged during Garcia’s first term, attributing most government abuses to security
forces over which the Garcia administration exerted little control. In April 2006 a
Peruvian newspaper published a declassified U.S. government document stating that
during Garcia’s tenure as President, his party ran at least one, and perhaps several, secret
paramilitary organizations, and that his Deputy Interior Minister supervised a secret police
force. The document said the minister believed that APRA needed to be able to
“eliminate” terrorists, but does not say whether the APRA-run forces carried out
ex ecut i ons. 8
Opposition Party Leaders. Twenty-four candidates originally registered to run
for president, although some dropped out before election day. Although candidates
Ollanta Humala, Lourdes Flores, Martha Chavez, and Valentin Paniagua did not win, their
parties will have a presence in the incoming legislature. Without a majority, Garcia’s
Aprista party will need to negotiate with these parties to pass legislation. These parties
and their leaders may also gain influence nation-wide, depending on the outcome of
November 19th’s regional and municipal elections.
Ollanta Humala.9 Although he lost the presidential election, Humala may still be
able to exert influence through his party’s presence in the legislature and possibly nation-
wide in regional offices. Humala is a retired army officer who led a failed coup attempt
in 2000 against then-President Fujimori and who espouses nationalist, anti-globalization
policies. His statements are often contradictory. His campaign rhetoric was polarizing
and extreme-leftist, saying he would veto the free trade agreement with the United States,
nationalize key industries, and renegotiate international commercial contracts.
Venezuela’s leftist President Hugo Chavez publicly endorsed his campaign.
Yet in meetings with business groups and the press, Humala took a more moderate
tone. He defined nationalization not as “expropriations” but as “giving the state a larger
role through tax collection, royalties, income taxes, even through an increase in state stock
ownership, if the state is able to invest.”10 He also said that he does not want to get
involved in an “ideological conflict with the United States” and that the “new
confrontation isn’t left versus right, but the harmful effects of globalization being
combated by nationalism.”11 Humalas’ populist rhetoric is designed to appeal to Peru’s
poor indigenous population, although he comes from a comfortable background and
8 Lucy Komisar, “Garcia May Have Had Paramilitary Links: A Declassified Document Asserted
that the Political Party of Former President Alan Garcia, in second place following Sunday’s
Presidential Election, ran a Paramilitary Organization,” Miami Herald, April 15, 2006.
9 Sources include Tyler Bridges, “Presidential Favorite Inspires Devotion, Fear,” Miami Herald,
April 9, 2006; Monte Hayes, “Peruvian Front-Runner’s Family an Issue,” Associated Press, April
5, 2006; Esther Rebollo, “Populist ‘Man on Horseback’ has Peru’s Establishment Worried,” EFE
News Service, April 7, 2006; Union for Peru and Peruvian Nationalist Party platform available
at [http://www.partidonacionalistaperuano.com]; “Ex-Spy Chief in Peru Says Candidate Aided
Escape,” Washington Post, May 21, 2006.
10 Andres Oppenheimer, “Peru’s Front-runner Shifts to Center, But How Much?,” Miami Herald,
April 16, 2006.
11 Lucien Chauvin, “Peru’s Puzzling Populist,” Time, April 7, 2006.
attended a select private school in Lima. His support among the poor in rural areas could
help his party in regional elections.
Many observers are concerned that Humala has authoritarian tendencies. The
Attorney General’s office is investigating charges that Humala committed human rights
violations, including torture and disappearances, while commander of a counter-
insurgency base in the early 1990s. Statements by his family, from whom he was careful
to distance himself during the campaign period, also caused concern. His father founded
an ultra-nationalistic movement advocating violence against the non-Indian population.
His brother Antauro, who joined Ollanta in the 2000 uprising, was jailed after another
failed coup attempt, this one against President Toledo in January 2005, in which four
police officers were killed. Antauro said that Ollanta Humala had helped plan the coup
attempt. Ollanta denies the charges.
Vladimiro Montesinos, Fujimori’s former intelligence chief, testified that Humala
staged the 2000 rebellion to facilitate Montesino’s escape from Peru the same day.
Montesinos made the claim during a corruption trial on May 19; he is already serving a
Humala denies the allegation. Montesinos controlled the military during much of his
tenure, and investigators have evidence that he may have had a role in the 2000 rebellion.
Lourdes Flores. Flores, a popular former member of Congress, represents the
center-right coalition National Unity. She lost the second-place slot in the run-off vote
by only 0.5% to Alan Garcia. A conservative and free market advocate, she had the
support of the business sector but advocated changes to the neoliberal economic model,
including emphasizing social development through investment in education and health
and promoting micro-credits and training for small businesses rather than large-scale
investment. She also said that a strong, but non-corrupt government would spread the12
benefits of economic growth to Peru’s poorest sector.
Martha Chavez, Alberto Fujimori. Chavez, who represents Fujimori’s alliance,
placed a distant fourth with about 6.17% of the vote. Fujimori, despite being barred from
holding office until 2010 and being charged with ordering murder and torture, tried to
return to Peru to run for president. Peru’s courts and elections board reaffirmed the
restriction against him from running for office. The Chilean government arrested him in
November 2005, released him on bail in May 2006, and is processing Peru’s request for
his extradition. Many observers believe his party will try to get him pardoned.
Valentin Paniagua. Paniagua, who as interim president (2000-2001) steered the
country out of a political crisis, stabilizing the economy and organizing fair elections, won
about 6.17% of the vote. He represents the well-established Popular Action party that has
moved toward the political center, and is part of the Center Front coalition.
12 Sources include Michael Voss, “Peru Candidates Court the Poor,” BBC News, Lima, March
April 7, 2006; “Flores: Conservative Hopes to become Peru’s First Female President,” Agence
France Presse, April 9, 2006; “Peruvian candidate Lourdes Flores Criticizes Venezuela’s
Chavez,” BBC Monitoring Americas, April 8, 2006.
Issues for Congress
Issues in U.S.-Peruvian relations include trade, drugs, democracy and human rights.
Trade is the most pressing issue between the two nations because of the free trade
agreement (FTA) they signed in December 2005. The Peruvian legislature ratified the
agreement in June. Toledo pushed for passage before the end of his term in part because
of concern that Humala’s bloc would oppose the pact in the next legislature and Garcia’s
stance was unreliable. Although Garcia now generally favors free market policies, he
avoided taking a position on the FTA during a national debate in May. His party
supported ratification of the trade agreement in June, but since then Garcia said he would
renegotiate elements of the agreement detrimental to Peruvian interests.
The most controversial elements of the FTA for the U.S. Congress are labor rights
and environmental protection issues. Some Members, concerned that Peruvian labor laws
are inadequate, urge inclusion of International Labor Organization (ILO) standards. Not
doing so, they argue, could exacerbate inequitable distribution of wealth in Peru and
engender further hostility toward U.S. policy. The Bush Administration is reluctant to set
a precedent of including ILO standards in its trade agreements and says Peru should be
rewarded for seeking closer ties with the United States, especially in the face of
Venezuelan President Chavez’ efforts to promote more populist policies.13 The
Administration says this is the first FTA to include a commitment to protect and conserve
biological diversity. The Senate Finance Committee held a hearing on the agreement June
Peru is a major illicit drug-producing and transit country. The United States and
Peru signed a five-year cooperative agreement for 2002-2007 that links alternative
development to coca eradication more directly than past programs have. Garcia supported
Ecuador’s request that the U.S.-Andean Trade Promotion and Drug Eradication Act
(ATPDEA) be extended. The act, due to expire at the end of 2006, allows duty-free
imports for many goods from Peru and the other Andean nations as a reward for counter-
narcotics cooperation. U.S. officials say an extension of the act is unlikely.14 A U.S.-Peru
FTA would supplant many of the ATPDEA’s benefits for Peru.
The United States supports democracy and human rights programs in Peru. Garcia
Flores, and Paniagua have been effective opposition leaders, working within the
democratic system for change. Humala has no previous governing experience and
organized at least one coup. Observers express concern about the human rights records
of both Garcia and Humala. Some human rights observers express concern that Garcia
will use the presidency to further embed impunity for human rights violations that
occurred during his earlier administration.
13 “USTR to Press Congress on Oman, Peru, Vietnam Trade Deals,” Dow Jones International
News, July 11, 2006.
14 “Peru’s Garcia Supports Ecuador’s Drug Eradication Request,” BBC Monitoring America, July
8, 2006, and Jeanneth Valdivieso, “OAS Chief Backs Andean Nations’ Push for US to Extend
Trade Benefits,” Associated Press, July 11, 2006.