Peru’s Castillo Has a Marxist and a Fiscal Hawk in Inner Circle

Jun 9, 2021


(Bloomberg) -- A former World Bank economist who believes in fiscal prudence and a Marxist neurosurgeon trained in Cuba are among those jockeying for influence over Pedro Castillo, the favorite to be Peru’s next president.

Castillo, 51, a former school teacher from the Peruvian highlands, has no experience in national politics, so his advisers are likely to have a large influence over governing the country of 32 million.

With 98% of votes tallied, Castillo is leading with 50.2%, versus 49.8% for his rival Keiko Fujimori. He has already claimed victory, though this hasn’t been confirmed by the electoral authority.

If he can hold on to his lead, he’ll be sworn in as president on July 28.

The nation’s stocks, bonds and currency have fluctuated wildly this week as investors try to gauge just how radical Castillo will turn out to be if he becomes president next month. That may depend on which of his advisers gains ascendancy.

Veronika Mendoza

Mendoza, 40, is a Peruvian-French former congresswoman whose proposals to tax the rich make her a natural ally of Castillo. Several of the people now advising the candidate, including his chief economic adviser, formerly worked with her. After coming sixth in the first round of the presidential election, she backed Castillo, and gave him a team of professionals to draft a government plan, while he in return signed a commitment to respect democratic institutions and international agreements on human rights.

If Castillo ekes out a narrow victory, as looks likely, Mendoza’s support may have been decisive, by helping to broaden his appeal beyond his Marxist political party and his rural base.

“There has been a slow process in which the economic team of Veronika Mendoza has gained prominence around the candidate,” said Giovanna Penaflor, the founder of Imasen, a Lima-based political research company. This should tend to moderate Castillo’s program, Penaflor said.

James Bosworth, the founder of Hxagon, a political risk analysis company that covers emerging markets, said that Mendoza is “absolutely key to getting anything passed in congress.”

“It’s not her party’s votes as much as her personal knowledge of how congress works and the coalitions needed to pass things,” he said.

Pedro Francke

Since being named his chief economic adviser last week, former World Bank economist Francke has tried to convince Peruvian voters as well as investors that Castillo isn’t a dangerous radical. He was a member of Mendoza’s team during the first round.

Francke, 60, has called for fiscal prudence and inflation-targeting, and is opposed to nationalization of companies.

Read More: Peru Leftist’s Aide Rejects Hugo Chavez Comparison

All of that is music to the ears of investors, but there are also powerful voices trying to pull Castillo in a much more radical direction.

Vladimir Cerron

Cerron, 50, is a neurosurgeon and radical Marxist who lived for years in Cuba, where he studied medicine. As the founder and leader of Castillo’s Peru Libre party, he controls the biggest movement in congress, which would guarantee him a lot of influence over a Castillo government.

“He’s the owner of the party, and who put the members of Peru Libre in congress,” said Rodolfo Rojas, a partner of the Lima-based Sequoia political advisory group. “If Castillo fights with Cerron, he could end up without members of congress”

Castillo appears to have seen the need for a moderate course, but Cerron’s power and influence will tend to pull him in a more radical direction, Rojas said. Castillo has tried to distance himself from Cerron in a bid to win over moderate voters, but he needs his backing in the legislature in order to hold on to power.

Cerron’s party has 37 members in the 130-seat congress, while Mendoza has 5. Castillo will need their support to avoid the fate of President Martin Vizcarra, who was impeached and forced out of office last year. Even so, he won’t have enough votes to get laws passed without making alliances.

Hernando Cevallos

Like Cerron, Cevallos is a doctor as well as a politician, and is advising Castillo on health issues. Peru has suffered a higher per capita death rate from the pandemic than any other country, and ramping up the vaccination drive is a pressing need. Castillo has pledged a massive increase in health spending if he wins. As a congressman in the 2016-2019 period, Cevallos promoted the medicinal use of cannabis and the improvement of conditions for health workers.

©2021 Bloomberg L.P.