Keiko Fujimori Concedes Defeat After Peru Knife-Edge Vote

  • Pedro Pablo Kuczynski, 77, nosed past Keiko Fujimori, 41
  • Kuczynski plans to cut taxes, sell bonds, build infrastructure

Keiko Fujimori conceded defeat in Peru’s presidential election, bringing an end to the closest presidential runoff vote in the country’s history after losing to Pedro Pablo Kuczynski by less than 50,000 ballots.

“Democratically, we accept these results,” Fujimori told reporters in Lima, surrounded by the 73 lawmakers of her Fuerza Popular party that comprise the biggest parliamentary majority in two decades. “We’ll be a responsible opposition, always thinking of the country’s future.”

Kuczynski, a 77-year-old former finance minister and Wall Street veteran, won 50.12 percent of votes with all the ballots processed, compared with 49.88 percent for Fujimori, the electoral office said Thursday.

Locked in a neck-and-neck race for much of the campaign’s two months, Kuczynski edged past 41-year-old Fujimori last week. This followed an endorsement from a key left-wing politician, a large anti-Fujimori street rally and his renewed focus on warning that his opponent would take Peru back toward a corrupt autocracy.

This was a reference to Fujimori’s father, Alberto, who while president from 1990 to 2000 defeated the Maoist guerrilla group Shining Path and hyperinflation but also permitted death squads, engaged in corruption and temporarily shut Congress. He is serving a 25-year prison term outside Lima. His legacy weighed heavily on the election, especially because Keiko Fujimori invoked her father’s victory over terrorism as a model for how she would handle criminal gangs. Many feared she would fall prey to her father’s darker tendencies and they united behind Kuczynski.

“He got pretty lucky,” said Cynthia McClintock , a political scientist at George Washington University who’s been following Peruvian elections for four decades. It took “the cleavage between Fujimorismo and anti-Fujimorismo to push him over the top.”

Economic Boom

Like many Latin American countries, Peru rode a commodity boom and Chinese investment for more than a decade. But commodity prices have plummeted and China’s economy has slowed. Millions of Peruvians who have moved tentatively into the middle class feel at risk. Still, Peru remains economically stronger than most of its neighbors, on schedule to grow 4 percent this year, while Brazil and Venezuela suffer recession.

“It’s been a remarkable 15 years for the Peruvian economy and despite the last two years, a lot of Peruvians are saying no, let’s not throw this away,” McClintock said by phone. “Let’s have someone experienced at the helm.”

Educated at Oxford and Princeton and a former executive at the World Bank and International Monetary Fund, Kuczynski is unusually versed in economic policy. But Fujimori is the politically savvier and her Fuerza Popular party’s dominance of Congress will complicate his efforts to carry out his policies.

Fujimori’s party won 73 of the 130 seats in Congress in a parliamentary vote in April while Kuczynski’s won 18.

“We take this virtual result with a lot of modesty,” Kuczynski told a gathering of allies and reporters Thursday. “Peru has big challenges ahead. We want a united, reconciled country that’s ready for dialog.”

Class and Race

The campaign had elements of class and race as Fujimori, who spent the past five years trekking from village to village, suggested Kuczynski was high-handed and loyal to the "whites" associated and big business and Lima’s wealthy elite rather than the darker-skinned countrymen spread through the Andean mountains and Amazon jungles.

It is a form of nativism that had impact but, in the end, not enough. Fujimori herself is not a back-country local, having grown up in the lavish presidential palace the granddaughter of Japanese immigrants, educated at Boston and Columbia Universities and married to an American. But through her father’s political network, she was connected to far-flung villages and evinced a populist ease.

Kuczynski, a cosmopolitan son of Europeans, had to battle the notion that he’s a rich gringo who spent his life and career out of Peru and is unfamiliar with its essence and culture. His father was a Berlin-born physician who was a pioneer in Peru against tropical diseases and leprosy and his mother was a French literary scholar. Kuczynski was born in Lima and spent his childhood in Peru, but was educated in England and the U.S., spending years abroad. He speaks unaccented Spanish, English and French and is counting on his contacts throughout global high finance to ease his plans for aggressive bond sales and foreign investment. He has been a senior Peruvian official several times, having been minister of mines as well as finance minister twice.

Economic Proposals

He wants to lower sales taxes for everyone, but especially for small businesses that are now outside the tax system with the intent of luring them in. He says that will allow them to borrow from banks rather than at the high rates of the informal economy and create the conditions for much-needed credit expansion. This plan will also create jobs in the private sector, he says. He wants to diversify the mining-based economy toward farming and tourism and persuade coca growers and dealers to switch to legitimate crops and pursuits. Peru is one of the world’s largest producers of cocaine.

“You have Pedro Pablo, who’s old and basically a gringo, and criticism of Keiko, that she’s her father’s daughter and maybe has ties to corruption,” said Dennis Jett, who was U.S. ambassador to Peru in the late nineties. “He’s the safer choice, in terms of continuity.”

Kuczynski is set to take office for five years at the end of July, replacing President Ollanta Humala who is barred by law from a second term.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE