Peru Election 2006

March 20: Humala’s inexorable rise
Edited by Richard Lapper, Latin America Editor
Financial Times Americas, March 19 2006 15:39
As the Peruvian election campaign enters its final stages, Ollanta Humala, a nationalist former military officer, is looking increasingly likely to win April’s presidential election. A poll published on Sunday by Apoyo, gave Mr Humala a four-percentage point lead over Lourdes Flores, the pro-business right-winger. In a second round run-off, both candidates were tipped to score 50 per cent (go here for detailed coverage of the polling).
Markets had already begun to reflect the possibility of a Humala victory, with shares, bond and the local currency falling. Peruvian bond spreads – the most widely acknowledged measure of political risk – have widened by nearly three-quarters of a percentage point in the last month, and the paper now trades at a substantial discount to that of Brazil or Venezuela.
The surprising thing is that US investment banks – such as JP Morgan and UBS – have taken some time to react. Even last week they still argued that Ms Flores would win a second run-off against either Mr Humala or Alan Garcia, the former president and leader of the centre-left Apra party.
Few Peruvian-based analysts shared their confidence. Indeed, virtually every analyst, diplomat and journalist with whom the FT was in contact last week (before Sunday’s Apoyo poll) thought Mr Humala to be virtually unstoppable if present trends continue. Although it is true that polls show Ms Flores winning the second round run-off, these local analysts all said that the very large number of “don’t knows” recorded in surveys covers a very substantial hidden vote for Mr Humala. Indeed, Apoyo’s latest poll showed a falling number of “don’t knows” translated directly into a higher vote for Mr Humala.
In addition, many Peruvian polls do not register the votes of people living in the most remote rural communities, a group that is also likely to cast its ballots in favour of Mr Humala. In a society that is acutely ethnic- and race-conscious, Ms Flores has made things no easier for herself by choosing an elderly white businessman, Arturo Woodman, to run as one of her vice-presidential candidates.
Historical and regional political trends also favour Mr Humala. Luis Benavente Gianella of the University of Lima’s GOP polling agency says poorer Peruvians are now so distrustful of establishment political parties that political outsiders such as Alberto Fujimori, president between 1990 and 2000, Alejandro Toledo, who will step down in July at the end of his five year term, and now Mr Humala, carried a natural advantage. Broader trends in Latin America, especially in the troubled Andean region, also pointed to a victory by Mr Humala.
Polls had predicted neither the very strong votes by Evo Morales, who won a landslide victory in December’s Bolivian presidential, nor the performance in February by Ottón Solís, an anti-system radical who came within a whisker of winning the Costa Rican presidency.