FOR A LOT this century, Peru has established itself in Latin America as a success. The economy grew at an average annual rate of 5.6% between 2001 and 2016, while the share of people living below the national poverty line increased from over 60% to 21% during the same period. . Inequality has also declined, as the incomes of people living in the Andes, long the poorest region, have grown faster than the national average. Like Chile and Colombia, which have also performed well economically, Peru has pursued free-market economic policies and export-led growth, avoiding the state protectionism that has held back Argentina. and Brazil.

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Much of the progress has stalled, primarily because of political strife that produced four presidents (and eight finance ministers) in five years. Then came the pandemic, which killed 190,000 Peruvians and plunged 3 meters into poverty. Today, Peru’s future is held hostage by a divisive second round of presidential elections. With almost all of the votes counted, Pedro Castillo, rural schoolteacher, subsistence farmer and union leader, won by a hair against Keiko Fujimori, daughter of Alberto Fujimori, the conservative who ruled the country as an autocrat. in the 1990s. Neither candidate is a model of democracy.

Mr. Castillo represents a cry for social justice from Peru which has felt left behind, especially during the pandemic. He is an admirer of Evo Morales, the former socialist strongman of Bolivia; his party is led by an apologist for Cuban communism and the Venezuelan dictatorship. He has little previous political experience, gave few interviews and little guidance on how and with whom he would govern. Ms Fujimori herself has a lot of baggage: When her party held a majority in the Peruvian Congress in 2016-19, it sought to sabotage an elected government, destroy valuable education reforms, and take over independent institutions. . But she has attracted the support of many who fear a left-wing affair.

Peru now faces several perils. The first is a scuffle over the outcome, which may not be declared for several days. Ms. Fujimori recklessly claimed election fraud, without serious evidence. Mr Castillo’s victory, assuming it is confirmed, carries two additional risks. One is that he is following the left-wing populist scenario he campaigned on: the nationalization of the mines and the convening of a constituent assembly to draft a new constitution that could allow him to seize near absolute power, as did Mr. Morales. As his mandate will be fragile (he only obtained 15% of the total votes in the first round) and that he can only count on 42 of the 130 members of the new Congress, which should authorize an assembly, this is likely to be hard. . But if he buys popularity by grabbing, for example, a mine or central bank reserves, it is possible. The other and more likely risk is that of a weak and incompetent government that undermines the foundations of economic stability and causes a prolonged crisis of confidence. The sol, long one of the region’s most stable currencies, has already lost 8% of its value against the dollar this year.

The hope is that Mr Castillo realizes that in order to rule the country successfully, he has to appeal to the half of it who rejected him. To achieve the improvement he wants in the lives of the poorest Peruvians in the interior, we need a growing and sustainable economy. There is a precedent. In 2011, Peruvians elected Ollanta Humala, a former army officer who had campaigned against the economic “model”. His government has introduced useful reforms while keeping the economy running. But Mr. Castillo has less knowledge of the world and less time to adjust than Mr. Humala.

How Peru got here is a lesson in how to waste progress. It had long been clear that the country needed to supplement its market economy with a more efficient state to provide much better public services, including health care. To diversify the economy away from mining requires more investment in people, innovation and infrastructure. Instead, the conservative establishment opposed the change. The same failure to create more inclusive societies plunged Chile and Colombia into turmoil. As we have pointed out in these pages in recent weeks, polarization, fragmentation and populism also plague the giants of Latin America, Brazil and Mexico. But the case of Peru, with 18 candidates in the first round, then a choice between two extremes in the second, is particularly severe. There may still be a moderate majority in Peru. He will have to make his voice heard.

This article appeared in the Leaders section of the print edition under the title “Peru in Peril”

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