Economic Impact of War And Sanctions Reaches Far And Wide
April 13, 2022—Pedro Castillo won a very close election last year as the left-wing option to Keiko Fujimori, the right-wing daughter of a dictator. It’s been a rough ride for President Castillo with multiple crises taking place and government ministers changing frequently. But all that turmoil grew worse in the last few weeks. Castillo now finds himself in a position where you can usually find right-wing leaders: Fending off a protest movement started by transport syndicates.
The last few weeks in Peru have seen the people take the streets and even call for a countrywide strike. What started with a protest against the rise in oil price by truckers escalated to more and more sectors of society. In some places, it turned violent after the Peruvian police forces tried to stop them, at the moment of writing there have been at least 8 people dead.
Economic Impact of War And Sanctions
It’s an interesting and worrisome development. On one hand, you can draw a direct line back to the Russian invasion of Ukraine and the sanctions imposed by the West. The economic impact is hitting, even in countries that have not put sanctions on Putin.
On the other, it shows just how unstable the region is. That’s especially so in Peru, where three presidents have gone to jail, and one killed himself before going.
Pandemic Impact
At the same time, it is also a good reminder about the impact of the pandemic in the developing world. After years of economic growth, Peru’s economy has been stagnant for the last two years, throwing many people into poverty. The conditions no doubt livens up the flames of protests.
Government Imposes Martial Law
To be fair it’s probably a combination of both the war and Covid driving economic discontent. But Castillo’s style of governance certainly hasn’t helped. His response has been to send in police forces to repress the protest. What’s more, this week he tried unsuccessfully to impose martial law to stop the riots that had started after the confrontations between the protestors and the police.
Calls for Castillo To Resign
To Castillo’s dismay, the protestors are now asking for his full resignation. If they succeed, which seems unlikely, it could change the map of the continent. That would give pause to political observers who predicted a stable turn to the left in the continent. (Yes, the Global Economic Report noted just that in this reporter’s analysis of Latin America in January.)
It’s also a good reminder of how easily a protest movement can take place on the continent and grow large quickly. Remember in the last few years Colombia, Chile and Venezuela saw massive protests. In Chile’s case, they made way for a new constitution and the Gabriel Boric presidency. Remember, as we explored in late December, the first president to be born after the coup that ended in the death of President Salvador Allende.
A Big Stumble
Still, Castillo has already given concessions to the protestors. He lowered the price of gas, and he raised the minimum wage. But the violence by which he is using in response to the protest has made people angrier. That in turn, is making his popularity plummet. So even if he survives this crisis—and he might—he’ll probably have a harder time implementing the more radical ideas that were the basis of his presidential campaign.
What’s clear is that Castillo’s crisis is the first big stumble for Latin America’s new left. It is probably going to be the defining moment of his presidency, and it could absolutely reflect on the rest of the continent.
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