Twelve days in office and crisis swamps Peru’s leftist president

Bloomberg

Peru’s new president is off to a rocky start, selecting contentious ministers, alienating allies and setting the stage for a brutal face-off with congress, all within days of taking office.
A rural teacher and union activist, Pedro Castillo won the election after reassurances that he’s his own man, not beholden to his party’s Marxist ideology or chief.
But when he named his cabinet— including a prime minister who’s under investigation for being an alleged apologist for terrorists — analysts, opposition figures and even some who’d backed him expressed alarm, so much so that the word “impeachment” was heard more than once.
“His political capital went up in smoke in 24 hours,” said Rodolfo Rojas, a partner of the Lima-based Sequoia political advisory group. “If he doesn’t change course, there’s no future for him.”
Impeachment isn’t imminent, Rojas said, but a clash with congress looks likely. And while Peru has made a habit of ousting presidents, it’s rare for such a discussion to take place within days of inauguration.
Investors are also deeply concerned. Stocks crashed 6% in just one day, bonds are faltering and the Peruvian sol is the worst-performing currency in the world since Castillo was sworn in. Barclays estimates that investors have pulled some $3 billion every month from the country since the April election.
Several key backers have split with Castillo, including Partido Morado, a centrist party, La Republica, a major national newspaper that supported him, as well as a teacher’s union.
Impeaching presidents in Peru is easier than almost anywhere on earth. Castillo’s opponents would just need 87 out of 130 votes in the single-chamber congress, and he could be ousted under the loosely defined “moral incapacity” clause. Former president Martin Vizcarra was impeached last year under it and nearly every Peruvian president elected since 1985 has been impeached, imprisoned or sought in criminal investigations.
Castillo’s party has only 37 seats; including allies it’s still fewer than 50. His opponents, in other words, dominate congress.

Confrontation
Some suspect Castillo named Bellido in order to set up a confrontation with congress. Under the country’s unusual constitutional rules, if congress twice rejects his cabinet, the president can dissolve the chamber and call for new elections.
“If they don’t like the Bellido cabinet, they’ll give it a vote of no-confidence and we’ll immediately present another cabinet,” said Guillermo Bermejo, a congressman for Castillo’s Free Peru party. “And if they don’t like that one, it’s goodbye congress!”
That could set the stage for what Castillo has said he wants — a constitutional assembly to rewrite the nation’s charter, something done by other Latin American radicals, such as Hugo Chavez in Venezuela. Castillo is also being watched as a harbinger of what may be a leftward regional shift in investor standouts, with elections due in the coming 14 months in Chile, Colombia and Brazil.