PPK's political crisis

Peruvian president Pedro Pablo Kuczynski, known as PPK, has found himself in the centre of a political crisis after narrowly escaping an impeachment vote and then pardoning former president Alberto Fujimori on Christmas Eve. PPK's growing unpopularity and ensuing political uncertainty are likely to slow foreign investment in the six-month outlook.

Odebrecht and Impeachment

Kuczynski has faced allegations that he received illegal payments from'Odebrecht S.A., a Brazil-based engineering and construction firm implicated in a global corruption scandal that has entangled the region. Kuczynski admitted to having legal business dealings with the firm, a fact that he previously denied. Despite the denial, a motivated opposition, led by congress member Keiko Fujimori, daughter of former president Alberto Fujimori, called for an impeachment vote. As impeachment seemed imminent, Kenji Fujimori, congress member and son of Alberto Fujimori, abstained from the vote along with several supporters, ensuring Kuczynski's survival. Impeachment requires 87 votes and there were 78 votes in favour of Kuczynski's removal, with 21 abstentions. Just two days following the impeachment proceedings, Kuczynski pardoned Alberto Fujimori in a national address on Christmas Eve, citing his degenerating health. Fujimori was serving a 25-year sentence for crimes against humanity for directing kidnappings and murders during his tenure as president. The pardon is likely part of a political deal between Kuczynski and congress members loyal to Kenji Fujimori. More than 5,000 protesters angered at the pardon fought with police on Christmas Day in the capital Lima. Also read:'2018 Global Risk Forecast ' The Americas The Odebrecht scandal is a highly charged topic with the public in Peru, as the firm has admitted to paying Peruvian officials up to USD29 million in the past. The previous two presidents, Ollanta Humala and Alejandro Toledo, have been implicated in the scandal. Humala was arrested on corruption charges in July 2017 and Toledo is wanted by authorities in Peru but is living in the United States. The business dealings that Kuczynski eventually admitted to having with Odebrecht occurred between 2004 and 2013, during which time he served as economic minister and head of cabinet. In a recording leaked to Peru's attorney general in November 2017, Marcelo Odebrecht, former CEO of Odebrecht, says that his company paid bribes and irregular campaign contributions to Humala, Toledo, and Keiko Fujimori.


Alberto Fujimori ruled Peru as president from 1990 to 2000, dissolving congress and suspending the constitution in 1992. During his presidency, Fujimori waged a brutal campaign against the Maoist insurgent group Sendero Luminoso, or Shining Path. The campaign largely dismantled the group, garnering public support. But the victory came at a cost, and in 2000, Fujimori fled to Japan amid allegations of corruption and criminality, attempted to resign, and was impeached shortly thereafter. After his arrest while visiting Chile and eventual extradition to Peru, in 2009 the Inter-American Court of Human Rights (IACHR), a regional body tasked with protecting human rights in the region, convicted Fujimori of orchestrating murders and sentenced him to 25 years in prison. Since Fujimori's imprisonment, the Fuerza Popular party carries on his promarket, anti-communist tenets known as Fujiirismo. His children, Kenji and Keiko, have been at odds with each other over how to gain control of the executive. Keiko was leading the charge for Kuczynski's impeachment while Kenji prevented the impeachment and likely garnered his father's pardon in return. Keiko, who unsuccessfully ran for president in 2011 and in 2016, is facing several corruption allegations and declining approval ratings.


Soon after the pardon, nearly a dozen officials resigned in protest against the move, including the culture minister, interior minister, defence minister and several aides. Three congress members belonging to Kuczynski's Peruanos Por el Kambio (also called PPK) resigned, reducing the party's number of seats to only 15 of 130 in congress. Several leftist congress members are calling for another impeachment vote over the alleged pardon deal with Kenji Fujimori. On 9 January, Kuczynski announced a new 'cabinet of reconciliation' in an attempt to regain confidence. The cabinet consists of nine new members and is more politically diverse. According to a survey conducted by Ipsos Peru in December 2017, the public wants radical political change. In response to two separate questions, 57 per cent were in favour of Kuczynski leaving office, and 61 per cent were in favour of the president dissolving congress. Kuczynski's approval rating fell from 27 to just 18 per cent, while Keiko Fujimori's fell from 39 to 32 per cent. A key finding of the survey was that the majority of Peruvians believe that all politicians, including Kuczynski, have received payments from Odebrecht. When asked how they would vote in the event of a general election, Keiko Fujimori came out on top, but with only 27 per cent. Former presidential candidates Julio Guzm'n, Ver'nika Mendoza of the leftist Frente Amplio party, and Kenji Fujimori received 10, 9 and 7 per cent respectively. In response to the same question, 27 per cent of respondents stated they would not vote for any of the proposed candidates currently considered as presidential contenders. This distrust and disillusionment with politicians as a result of corruption scandals can be seen throughout Latin America in countries such as Brazil and Ecuador. As investigations target many in the political establishment, candidates from smaller political parties could take centre stage and follow the global anti-establishment trend.