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Turmoil risks financial stability Peru long took for granted

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Turmoil risks financial stability Peru long took for granted

Marco Gonzales ventured to the Andean city of Cusco from his home in the Peruvian Amazon in 2007 with little more than $20, a smidgeon of English and a change of clothes poorly suited for the icy mountain air.

He started offering walking tours of the former Incan Empire capital in exchange for tips. Along the way he fell in love with a British backpacker, Nathalie Zulauf, and together the couple built a travel business and family.

But now it’s all at risk of collapsing along with so much of Peru’s once-enviable economic stability.

The couple’s company, Bloody Bueno Peru, which caters to mostly foreign tourists from Britain and elsewhere, hasn’t seen a customer since December, when protesters demanding the resignation of interim President Dina Boluarte all but cut off access to the ancient ruins of Machu Picchu. Groups have canceled reservations months in advance, forcing the couple to dip into savings already depleted by the coronavirus pandemic.

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“We’re waiting until March to see if the situation improves,” said Gonzales, 38, staring at a calendar he no longer bothers to update. “If it doesn’t we’ll have to explore other options, like shutting down the business and emigrating. At least in England we have Nathalie’s family.”

Others in Cusco have far less to fall back on.

The city of 450,000, normally a polyglot mecca of foreign travelers, is a ghost town these days. The Plaza de Armas, where women dressed in colorful Andean textiles used to pose for snapshots, now attracts demonstrators playing cat-and-mouse with heavily armored riot police.

Political turmoil is nothing new in Peru, which has seen six presidents in the last five years. In 1969, with a military dictatorship in power, Nobel Prize-winning author Mario Vargas Llosa posed this now iconic question to start his novel “Conversations in the Cathedral”: “At what precise moment did Peru screw itself?”

For a long time, the dysfunction was held in check and didn’t interfere with sacred cornerstones of the free-market economy like the key mining industry. Since 2000, Peru’s economy grew at an average annual rate of 4.4% — more than any country in South America —with low inflation and a stable currency. Until the pandemic hit, poverty had fallen by half.

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But the scale of violence following President Pedro Castillo’s Dec. 7 impeachment and arrest for a clumsy effort to shutter Congress — unrest that has left 57 civilians dead and hundreds more injured — has revived class and racial divisions and has many Peruvians wondering whether the long period of uneasy stability has run its course.

“This dichotomy couldn’t last,” said Steven Levitsky, a Harvard University political scientist and co-author of the 2018 book, “ How Democracies Die.”

Signs of the economic fallout are everywhere.

In December — as the political crisis got underway — the number of foreigners arriving in Peru had already fallen to the lowest level since 2009, aside from the two years lost to COVID-19. Activity at three major copper and tin mines had been suspended because highways were blocked or their facilities attacked by protesters.

Peru is the world’s largest exporter of grapes and the protests hit during the height of harvest. Shipments in one major growing area are barely 4% of a year ago, according to Darío Núñez, whose company, Uvica, has been unable to fulfill orders by U.S. retailers such as Costco and Sam’s Club.

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“The credibility of Peru as a brand is starting to suffer,” said Núñez. “I don’t see a light at the end of the tunnel.”

Peru’s democratic dysfunction, years in the making, accelerated with Castillo’s surprise election in 2021. A rural schoolteacher, he rose from obscurity to fill a void left by a broken political system, widespread graft and deep-seated racism.

His journey from an adobe home in one of Peru’s poorest areas to the presidential palace was fueled by fury in the long-neglected Andean highlands. But once in office, he shuffled his Cabinet almost weekly and was beset by corruption allegations that underscored his inexperience.

Elites in Congress, although even more discredited than Castillo, went on the offensive, using an obscure constitutional power to seek his impeachment for “moral incapacity.” This triggered Castillo’s move to shut down Congress, which backfired with his arrest on charges of rebellion — and vice president Boluarte’s ascension to power.

The current revolt has coalesced around an urgent demand: Boluarte’s departure. Congress could act by ordering early elections but has so far refused as lawmakers are reluctant to, in effect, fire themselves.

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Levitsky, the Harvard professor, said it’s too early to know how Peru’s crisis will unfold. One demand from protesters is that the constitution adopted during Alberto Fujimori’s 1990-2000 authoritarian rule and which strengthened free-market reforms be overhauled.

But whatever happens, Levitsky doesn’t see a return to the status quo.

“A state that doesn’t work is sooner or later going to fall into crisis,” he said. “They had 20 years to build a state and they failed miserably.”

Monuments to that failure are everywhere in Cusco: An unfinished highway that was supposed to bisect the city and the crumbling façade of the Hotel Cusco, a historic landmark owned by the city government.

But perhaps the biggest white elephant is the Hospital Antonio Lorena.

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Rising above the city’s red tile roofs, the sleek glass-and-steel structure was supposed to be the most modern in southern Peru when construction began in 2012. But after three years, the Brazilian builder abandoned the project amid an investigation into cost overruns fueled by alleged bribes paid to Cusco’s governor and the wife of Peru’s then-president Ollanta Humala.

Today, the half-built skeleton is covered by graffiti amid peeling paint, exposed power cables and shattered glass. On Dec. 7 — the day Castillo was arrested — a ribbon-cutting ceremony was held to mark the start of a 730-day, $244 million rescue plan for the project by a new foreign consortium with technical assistance from France.

Jorge Zapata, the head of Peru’s construction lobby, blames greedy politicians for the standstill. Nationwide, over 2,500 state-funded infrastructure projects worth $7 billion are paralyzed due to mismanagement, he said.

Meanwhile, instead of guiding tourists, Gonzales now spends his days scouring Cusco for a propane gas cannister to cook and bathe the couple’s 5-month-old daughter, Willow.

At an industrial depot, dozens of desperate residents were lined up this week in hopes demonstrators blocking the highways would halt their pickets long enough to let the trucks delivering the propane reach the besieged city.

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“This is really scary,” said Zula  uf, as she bounced her baby on her knees staring at the long line from her car. “In Cusco, people live day-to-day. If they can’t work, I don’t know how they’re surviving.”

Among those in line was Fredy Deza, who spent the night in a sleeping bag on the sidewalk.

Deza, 40, said the all-night vigil recalled another dark period in Peru’s history, when he would wait with his mother in long lines for bread, sugar and other staples during the chaotic 1985-1990 presidency of Alan Garcia.

“It’s like we’re going back in time,” said Deza, who worked as a guide in Machu Picchu until he was let go in December.

Prices for propane and other scarce items in Cusco are soaring due to inflation that jumped to 8.7% in January, near the highest level in a quarter-century. A black market has emerged, with cannisters going for three times the listed price.

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Adding to insult, the cooking gas many can no longer afford is pumped by a foreign-owned consortium from the resource-rich department of Cusco and transported by a pipeline to the capital, Lima, where the bulk is then exported. A projected second pipeline, which would deliver it to Cusco and other cities in the south, remains a pipe dream.

“It’s sad,” said Deza, as he prepared for another cold night, “that as owners of our gas we have to be enduring this.”

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UN court to give view on consequences of Israel occupation

UN court to give view on consequences of Israel occupation

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UN court to give view on consequences of Israel occupation

 The UN’s top court will next week hand down its view on the legal consequences of Israel’s occupation of Palestinian territories since 1967, a case in which some 52 countries made submissions.

Any opinion delivered by the International Court of Justice would be non-binding, but it will come amid mounting international legal pressure on Israel over the war in Gaza sparked by the brutal Oct 7 Hamas attacks.

“A public sitting will take place at the Peace Palace in The Hague (on Jul 19) … during which Judge Nawaf Salam … will read out the Advisory Opinion,” the ICJ said on Friday (Jul 12).

The ICJ held a week-long session in February to hear submissions from countries following a request from the United Nations late last year.

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The UN has asked the ICJ to hand down an “advisory opinion” on the “legal consequences arising from the policies and practices of Israel in the Occupied Palestinian Territory, including East Jerusalem”.

Most speakers during the hearings have demanded that Israel end its occupation, which came after a six-day Arab-Israeli war in 1967.

But the United States said Israel should not be legally obliged to withdraw without taking its “very real security needs” into account.

Speakers also warned a prolonged occupation posed an “extreme danger” to stability in the Middle East and beyond.

Israel did not take part in the oral hearings.

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It submitted a written contribution, in which it described the questions the court had been asked as “prejudicial” and “tendentious”.

The case before the court is separate from one brought by South Africa against Israel for alleged genocide during its current offensive in Gaza.

South Africa has gone to the ICJ several times arguing that the dire humanitarian situation means the court should issue further fresh emergency measures.

In an initial ruling on January 26, the ICJ ordered Israel to do everything it could to prevent acts of genocide during its military operation in Gaza.

It also called for the unconditional release of hostages taken by Palestinian militant group Hamas during its Oct 7 assault that sparked the war.

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Residents say bodies lie in streets in once-vibrant Gaza neighbourhood

Residents say bodies lie in streets in once-vibrant Gaza neighbourhood

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Residents say bodies lie in streets in once-vibrant Gaza neighbourhood

 Al-Rimal was once one of Gaza City’s most vibrant neighbourhoods, but the end of another Israeli assault left residents stumbling through the rubble on Friday looking for bodies and belongings.

Residents of Al-Rimal, which before the war was home to Palestinian government buildings and most of Gaza City’s remaining shops and restaurants, said bodies had been left lying in the streets.

The Hamas-run territory’s civil defence agency said scores of dead had also been found in nearby districts after Israeli troops ended a new operation against militants in parts of Gaza City.

Al-Rimal has been flattened by successive Israeli military operations since the Hamas attacks across the border started the Gaza war on October 7.

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The neighbourhood had already suffered in previous showdowns with Israel since Hamas seized sole control of the territory in 2007. Several apartment blocks were hit by Israeli fighter jets in 2021.

Teacher Tariq Ghanem said this time Israeli troops had wreaked “massive destruction” on Al-Rimal.

“The houses are on fire and there are shells everywhere,” the 57-year-old said.

“There have been bodies on the roads for the past week and… there is no one to retrieve them. There are injured people everywhere and no one can reach them.”

‘DANGEROUS COMBAT ZONE’

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The Israeli military ordered the evacuation of Al-Rimal, Tal al-Hawa and other districts of Gaza City on Monday and has since warned that the whole city is a “dangerous combat zone”.

One major target of the assault was the abandoned headquarters of the UN Palestinian refugee agency (UNRWA) in Al-Sinaa district that the army said had been taken over by Hamas.

A military statement said troops had found “parts for assembling an unmanned aerial vehicle, war rooms used for surveillance operations and large quantities of weapons, including tactical drones, rockets, machine guns, mortars, explosives and grenades.”

But residents said buildings across the city suffered heavy damage in the assault.

“There are many appeals for help, but we just cannot reach them,” said civil defence agency spokesman Mahmud Bassal.

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He said dozens of bodies were “scattered in alleys and inside destroyed houses” but his agency did not have the staff to recover them.

AFP correspondents saw heavy destruction across the city with several blocks barely standing.

Residents used donkey carts to ferry the wounded to hospital or to recover what belongings they could from the rubble.

Bassal said about 60 bodies had been found in the Tal al-Hawa and Al-Sinaa districts on Friday. The agency and residents said Israeli troops had pulled out but this was not immediately confirmed by the military.

On Thursday, the civil defence agency said 60 bodies had been found in another neighbourhood of Gaza City, Shujaiya, after Israeli troops pulled out, ending a two-week assault.

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The army said more than 150 “terrorists were eliminated” in its operation in Shujaiya, including Hamas commanders.

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Dozens of bodies reported as battles rock Gaza city

Dozens of bodies reported as battles rock Gaza city

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Dozens of bodies reported as battles rock Gaza cityv

Hamas-run Gaza’s civil defence agency said it found around 60 bodies after Israeli troops withdrew from parts of Gaza City on Friday, as heavy fighting gripped the Palestinian territory.

The grisly discovery came as international mediators pushed on with efforts to halt the war now raging into its 10th month.

US President Joe Biden said at a NATO summit in Washington on Thursday that despite problems, US diplomats and other mediators were making “progress” towards a ceasefire and stressed that “it’s time to end this war”.

The bodies were found in the Tal al-Hawa and Al-Sinaa districts, the civil defence agency said. Israeli forces had moved into the neighbourhoods this week after ordering civilians to evacuate on Monday.

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“There are still missing people under the rubble of destroyed homes, which is difficult for our crews to reach,” agency spokesman Mahmud Bassal said.

Residents and the agency said Israeli troops had pulled out after days of fighting with Hamas militants. This was not immediately confirmed by Israel.

‘TRAPPED’

Gaza’s health ministry had earlier reported 32 deaths in the territory, saying that the “martyrs, a majority of them children and women, were taken to hospitals overnight, because of continued massacres”.

Media linked to the territory’s Hamas rulers, whose October 7 attack sparked the war, said that Israeli forces had launched more than 70 new air strikes.

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Israel’s military said it was also fighting in the Rafah area of the south, where its troops had “eliminated numerous terrorists in close-quarters combat and aerial strikes”.

But the main battleground in recent days has been Gaza City, where two weeks of fighting devastated the eastern district of Shujaiya.

The Israeli army dropped thousands of leaflets on Wednesday urging all Gaza City residents to flee what it called a “dangerous combat zone” — an area where the United Nations said up to 350,000 people were staying.

One of those newly displaced, Umm Ihab Arafat, sat with her children on a sand pile amid the rubble as the incessant hum of Israeli drones filled the sky.

“I have been displaced four times,” she said, pleading for a break for her and her children. “They are entitled to rest, their eyes are full of horror and fear.”

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The International Committee of the Red Cross said “entire families are trapped and desperately seek security. The huge needs are beyond our capacity to respond”.

The ICRC said Gaza City residents had been instructed to move south “to areas that are overcrowded, lacking in essential services and are experiencing hostilities”.

TRUCE TALKS

Israel and Hamas have engaged in months of indirect talks via Qatari, US and Egyptian mediators to reach a still elusive truce and hostage release deal.

At the latest meeting in Doha on Wednesday, Israeli officials discussed the conditions for a ceasefire with US and Qatari mediators.

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The head of Israel’s Shin Bet internal security agency Ronen Bar was headed for talks in Cairo, Prime Minister Benjamin Netanyahu’s office said.

Netanyahu again insisted that any deal must allow Israel to meet all its war aims — destroying Hamas as well as bringing home all the hostages.

He also said Israel needs to maintain control of Gaza’s southern border with Egypt to prevent weapons being “smuggled to Hamas”.

Biden has laid out what he called an Israeli plan which would see a six-week truce in which hostages held in Gaza would be freed in exchange for Palestinians in Israeli prisons. A second phase would see talks on a full end to the war.

Biden acknowledged on Thursday that “difficult, complex issues” remain but insisted that “we’re making progress”.

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“The trend is positive,” he said, “and I’m determined to get this deal done and bring an end to this war, which should end now.”

Biden also stood firm on his decision to hold up delivery of massive 2,000-pound (900kg) bombs over concerns they could be used in populated areas, even as his administration moved forward on sending Israel less powerful 500-pound munitions.

He again pressed Israel for a “day-after” plan for Gaza and spoke of his diplomacy to persuade Arab states to help with security.

Hamas has proposed an independent and non-partisan government for both post-war Gaza and the Israeli-occupied West Bank, said Hossam Badran, a member of the group’s political bureau.

END OF TROUBLED AID PIER

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The war started with Hamas’s October 7 attack on southern Israel which resulted in the deaths of 1,195 people, mostly civilians, according to an AFP tally based on Israeli figures.

The militants also seized 251 hostages, 116 of whom remain in Gaza, including 42 the military says are dead.

Israel responded with a military offensive that has killed at least 38,345 people in Gaza, also mostly civilians, according to the health ministry in Hamas-ruled Gaza.

The World Health Organization said that only five trucks carrying medical supplies were allowed into Gaza last week, while over 70 more are waiting at the border.

Meanwhile, a problem-plagued US effort to get aid in by sea will soon end permanently, the US military said.

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US troops built the $230-million pier but the temporary facility has been repeatedly put out of use by high seas.

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