Today Alan García can be declared the virtual winner of the second round of the presidential elections in Peru. AFP reports that 91% of all votes have been counted and Alan García has consolidated his victory with a 7% lead over the nationalist candidate Ollanta Humala. Alan García will therefore lead Peru as president for a second time. He served as president from 1985-1990 and left the country in economic shambles and with extreme levels of political violence.
In a recent interview Mr. García explained that he has learned the lessons from the past and that,
I now realize there are no magic bullets. Change happens incrementally. . . . Not only has a lot of time passed, but the world’s economic structures, information technology and communication have changed. . . . What before seemed like a threat is now a virtue. . . . We are not against private property, but rather monopoly control. Businesses should compete among themselves. What my friend Evo Morales [Bolivia’s president, who nationalized the natural gas sector] just did is kill the goose that lays golden eggs.
Hopefully these are not just “empty words” and Mr. García will respect private property and implement sound economic reforms and not repeat the mistakes from the past that drove the country towards hyperinflation.
One of the main challenges that García’s new government will face is that high levels of economic growth did not translate into more jobs for vast sectors of the population. In particular, the population in the south of the country, where Humala won most of his votes, has been excluded from reaping the benefits from economic growth. The first round of the presidential elections clearly split up among those that gained a better standard of living as a result of economic reforms and those whose situation was ignored by the national government. While Lourdes Flores, a pro market reform candidate won the most votes in and around the capital, Ollanta Humala, a nationalist populist former military leader, who wants to return to heavy state intervention in the economy, won in most of the south of the country.
If García wants to truly leave a new legacy he will need to address these regional disparities. Only if all the population is able to benefit from economic reforms will García’s new administration be a success.
Published Date: June 06, 2006