April 11 (Bloomberg) -- The race to be Peru’s next president has narrowed to a supporter of greater state control over the economy who once led an army uprising and the daughter of a former leader imprisoned for human-rights abuses.
Ollanta Humala, a one-time ally of Venezuela’s Hugo Chavez, won 28.7 percent of the vote yesterday, after 68 percent of ballots were counted as of 11:19 a.m. New York time today. He’ll face in a June 5 runoff Congresswoman Keiko Fujimori, who finished second with 22.7 percent. Former Finance Minister Pedro Pablo Kuczynski came in third with 21.7 percent, while ex-President Alejandro Toledo won 15.1 percent. A nationwide quick count gave Fujimori a five percentage-point lead over Kuczynski.
While a Fujimori presidency may revive the trauma of her father Alberto Fujimori’s decade-long rule, the losing candidates are likely to rally behind her to prevent Humala from jeopardizing the fastest economic growth in Latin America over the past five years, said Michael Shifter, president of the Inter-American Dialogue.
“She’s not a real recipe for stability, but given the choice, there will be more resistance from the business community to Humala,” said Shifter, who hosted Humala at an event in Washington last year.
Humala, 48, won the first round of balloting in 2006 with 31 percent only to lose by five percentage points to President Alan Garcia in a runoff. The Andean nation’s stocks, bonds and currency tumbled as he surged from fourth into first place in opinion polls over the past month.
Both Humala and Fujimori are polarizing figures in Peru, though each has strong support in the Andean highlands where poverty affects 77 percent of the population in some areas.
Like Chavez, who as a paratrooper led a failed coup, Humala in 2000 led 50 soldiers who seized and occupied for a week one of Phoenix-based Southern Copper Corp.’s mines to protest corruption that beset Fujimori’s government. His brother, Antauro Humala, is serving a 25-year prison sentence for killing four policemen during the takeover of the southern highland town of Andahuaylas in 2005, in an attempt to force Toledo to resign.
While downplaying his ties to Chavez and muting the anti-capitalist rhetoric used in 2006, Humala’s platform proposes raising royalty fees on mining and gas production and drawing up a new constitution. He’s also pledged to renegotiate a free-trade agreement with the U.S. signed by Garcia.
Last night, at a victory rally in Lima, Humala vowed to seek national unity as president, telling supporters that “Peru wants change without shocks to bring about a big redistribution of the country’s wealth.”
Fujimori, 35, surrounded herself by her father’s former aides including running mate Jaime Yoshiyama, who served as his Minister of the Presidency. The jailed Fujimori is credited by supporters with laying the foundations of Peru’s economic boom by slashing inflation from 7,650 percent to 3.5 percent.
He also closed Congress in 1992 and saw his grip on power tumble after his intelligence chief, Vladimiro Montesinos, was caught on videotape in 2000 bribing opposition lawmakers.
In 2009, after returning from exile, Fujimori was convicted and sentenced to 25 years in prison for ordering a paramilitary squad to kill a group of suspected Marxist rebel sympathizers.
The mother-of-two was elected to Congress in 2006 with more votes than any other candidate. She met her American husband, Mark Villanella, while obtaining an MBA at Columbia University in New York.
Last night, she thanked her father though tried to reassure Peruvians there’d be no return to authoritarian rule.
“We must to look the future, not to the past,” she said as supporters chanted “Chino, Chino, Chino,” her father’s popular nickname. “We’re going to work with absolute respect for democracy, the rule of law, freedom of expression and the press.”
The cost of insuring Peru’s debt against default rose to its highest since 2009 last week on concern a Humala presidency would jeopardize $50 billion of mining, energy and infrastructure investment that the government expects will fuel 6.5 percent growth over the next five years. Peru, the world’s second-largest producer of copper, grew 8.8 percent last year.
Peru’s sol has declined 1.1 percent against the U.S. dollar since March 20, when Humala began gaining in the polls, making it the worst performer among 25 emerging-market currencies tracked by Bloomberg. The Lima General Index has fallen 3.4 percent in dollar terms during the past month, the sixth-worst performance among 90 primary stock indexes tracked by Bloomberg.
Garcia, 61, whose five-year mandate expires July 28, is banned by Peru’s constitution from seeking re-election. During his term, Peru created 2.5 million jobs and had its first-ever investment-grade ratings from Moody’s Investors Service, Standard & Poor’s and Fitch Ratings.
Toledo, who had been the early frontrunner, saw support for his candidacy fade since February though was the only candidate favored to defeat Humala in a runoff scenario, by four percentage points, according to an April 3 poll by Lima-based researcher Ipsos Apoyo. The same poll found Humala and Fujimori tied in a runoff scenario, with 42 percent support each.
Whoever is elected president may face gridlock in Congress. Humala’s Nationalist Party won about 39 of the 130 seats in Peru’s unicameral legislature, compared with 31 for Fujimori’s “2011 Force” and 23 for Toledo’s “Possible Peru” movement, according to exit polls.
Mario Vargas Llosa, the Peruvian novelist who won the 2010 Nobel Prize for literature, said last month that it would be a “catastrophe” if either Humala or Fujimori were elected.
“If the daughter of a dictator who’s serving a jail sentence for being a criminal and a thief has a chance of being president, I’ll be one of the Peruvians that will try to stop her by all legal means,” said Vargas Llosa, who lost the presidency to Fujimori in 1990 and was backing Toledo in this race.
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