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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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Netherlands remembers World War Two dead amid tight security

Netherlands remembers World War Two dead amid tight security

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Netherlands remembers World War Two dead amid tight security

Dutch King Willem-Alexander and Prime Minister Mark Rutte joined around 4,000 people on Saturday for the country’s annual World War Two remembrance ceremony amid restricted public access and heightened security due to the war in Gaza.

The ceremony on Amsterdam’s central Dam square, with the traditional two minutes of silence at 8 pm (1800 GMT) to commemorate the victims of World War Two, passed smoothly despite fears that there might be protests.

Normally some 20,000 people attend the Dam commemoration without having to register. But earlier this week municipal authorities announced unprecedented security measures to keep the ceremony safe and avoid possible disruptions linked to the Israel-Hamas war.

At the opening of a Holocaust Museum in Amsterdam in March, pro-Palestinian protesters opposed to Israel’s military campaign in Gaza set off fireworks and booed Israeli President Isaac Herzog as he arrived on a visit.

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Every town and the city in the Netherlands holds its own remembrance ceremony on May 4 and tens of thousands of people attend the events. The Netherlands then marks on May 5 the anniversary of its liberation from Nazi occupation in 1945. 

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Spain’s Sanchez says he will stay on as PM despite wife’s graft probe

Spain’s Sanchez says he will stay on as PM despite wife’s graft probe

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Spain's Sanchez says he will stay on as PM despite wife's graft probe

Spain’s Prime Minister Pedro Sanchez said that he would continue in office in response to a graft probe of his wife that he says amounts to a campaign of harassment.

Sanchez announced last Wednesday that he was mulling resignation after a Madrid court opened a preliminary probe into suspected influence peddling and corruption targeting his wife Begona Gomez.

“I need to stop and think whether I should continue to head the government or whether I should give up this honour,” he wrote in a four-page letter posted on X, formerly Twitter.

Thousands of supporters massed outside the headquarters of Sanchez’s Socialist party in Madrid on Saturday chanting “Pedro, stay!”

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Sanchez has said the move against his wife is part of a campaign of “harassment” against them both waged by “media heavily influenced by the right and far right” and supported by the conservative opposition.

Spain’s public prosecutor’s office on Thursday requested the dismissal of the investigation.

But Sanchez, an expert in political survival who has made a career out of taking political gambles, has suspended all his public duties and retreated into silence.

Last Thursday, he had been due to launch his party’s campaign for the May 12 regional elections in Catalonia in which his Socialists hope to oust the pro-independence forces from power.

‘Harassment’ campaign

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The court opened its investigation into Sanchez’s wife in response to a complaint by anti-corruption pressure group Manos Limpias (Clean Hands), whose leader is linked to the far right.

The group, which has presented a litany of unsuccessful lawsuits against politicians in the past, said in a statement on Wednesday that it had based its complaint on media reports and could not vouch for their veracity.

While the court did not give details of the case, online news site El Confidencial said it was related to her ties to several private companies that received government funding or won public contracts.

Sanchez has been vilified by right-wing opponents and media because his minority government relies on the support of the hard-left and Catalan and Basque separatist parties to pass laws.

They have been especially angered by his decision to grant an amnesty to hundreds of Catalan separatists facing legal action over their roles in the northeastern region’s failed push for independence in 2017.

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That amnesty, in exchange for the support of Catalan separatist parties, still needs final approval in parliament.

The opposition has since Wednesday mocked Sanchez’s decision to withdraw from his public duties for a few days, dismissing it as an attempt to rally his supporters.

“A head of government can’t make a show of himself like a teenager and have everyone running after him, begging him not to leave and not to get angry,” the head of the main opposition Popular Party, Alberto Nunez Feijoo, said on Thursday.

Sanchez, he said, had subjected Spain to “international shame”. 

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Scores killed in Kenya after dam bursts following weeks of heavy flooding

Scores killed in Kenya after dam bursts following weeks of heavy flooding

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Scores killed in Kenya after dam bursts following weeks of heavy flooding

At least 42 people died when a dam burst its banks near a town in Kenya’s Rift Valley, the local governor told AFP on Monday, as heavy rains and floods battered the country.

The dam burst near Mai Mahiu in Nakuru county, washing away houses and cutting off a road, with rescuers digging through debris to find survivors.

“Forty-two dead, it’s a conservative estimate. There are still more in the mud, we are working on recovery,” said Nakuru governor Susan Kihika.

Monday’s dam collapse raises the total death toll over the March-May wet season to 120 as heavier than usual rainfall pounds East Africa, compounded by the El Nino weather pattern.

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Meanwhile, the Kenya Red Cross said Monday it had retrieved two bodies after a boat carrying “a large number of people” capsized at the weekend in flooded Tana River county in eastern Kenya, adding that 23 others had been rescued.

Video footage shared online and broadcast on television showed the crowded boat sinking, with people screaming as onlookers watched in horror.

On Saturday, officials said 76 people had lost their lives in Kenya since March.

Flash floods have submerged roads and neighbourhoods, leading to the displacement of more than 130,000 people across 24,000 households, many of them in the capital Nairobi, according to government figures released Saturday.

Schools have been forced to remain shut following mid-term holidays, after the education ministry announced Monday that it would postpone their reopening by one week due to “ongoing heavy rains”.

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“The devastating effects of the rains in some of the schools is so severe that it will be imprudent to risk the lives of learners and staff before water-tight measures are put in place to ensure adequate safety,” Education Minister Ezekiel Machogu said.

“Based on this assessment, the Ministry of Education has resolved to postpone the reopening of all primary and secondary schools by one week, to Monday, May 6, 2024,” he said.

Turmoil across the region
The monsoons have also wreaked havoc in neighbouring Tanzania, where at least 155 people have been killed in flooding and landslides.

In Burundi, one of the world’s poorest countries, around 96,000 people have been displaced by months of relentless rains, the United Nations and the government said earlier this month.

Uganda has also suffered heavy storms that have caused riverbanks to burst, with two deaths confirmed and several hundred villagers displaced.

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Monday’s dam collapse comes six years after a similar accident at Solai in Nakuru county killed 48 people, sending millions of litres of muddy waters raging through homes and destroying power lines.

The May 2018 disaster involving a private reservoir on a coffee estate also followed weeks of torrential rains that sparked deadly floods and mudslides.

El Nino is a naturally occurring climate pattern typically associated with increased heat worldwide, leading to drought in some parts of the world and heavy rains elsewhere.

Late last year, more than 300 people died in rains and floods in Kenya, Somalia and Ethiopia, just as the region was trying to recover from its worst drought in four decades that left millions of people hungry.

The UN’s World Meteorological Organization said in March that the latest El Nino is one of the five strongest ever recorded.

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