Peru has been in varying degrees of turmoil since the impeachment and arrest of former president Pedro Castillo (2021-2022) on 7 December. Castillo’s ousting, which came after he illegally attempted to dissolve congress, triggered a storm of popular unrest that his successor, President Dina Boluarte, has inflamed with a violent crackdown on demonstrators. The protests have unleashed major economic damage by severing transport links, forcing shutdowns in the mining sector, and deterring tourists.
The protests are best interpreted as a swell of anger at Peru’s ruling class as a whole rather than a yearning for Castillo to return to office. Whilst the former president still has a bedrock of support among poor and rural Peruvians, the general mood in the protests has been one of fury at congress, which is widely seen as corrupt and which has blocked efforts to move general elections forward to this year, and at the security forces, who have waged a violent crackdown on demonstrators resulting in over 50 deaths.
The demonstrators have a wide range of demands and are not led by any one organisation, meaning that there has been no real possibility of resolving the unrest through dialogue. The protesters’ main demand is for President Boluarte to resign and convene immediate general elections, although the violence of the security forces’ response means that the protests have morphed into more generalised expressions of anger. Economic factors are also at play, with some of the fiercest protests taking place in deprived towns in the southern highlands.
At the height of the unrest in late January, the highways authority (Sutran) registered over 127 roadblocks in 18 of Peru’s 26 regions. These blockades caused shortages of food and fuel in a number of regions, with the energy regulator (Osinergmin) warning in January of severe fuel shortages in the regions of Madre de Dios, Ica, Arequipa, and Puno. Roadblocks are now largely contained to the southern region of Puno, where the unrest continues to be fierce; on 5 March, six soldiers drowned after being chased into a river by protesters while on their way to reinforce Puno city, where a police station was torched that same day.
Mining
The mining sector has suffered severe disruption from the protests, with a Bloomberg report estimating in late January that the unrest has imperiled as much as 30% of Peru’s copper output. According to Magaly Bardales Rojas, the head of the mining committee at Peru’s main hydrocarbons lobby, the Sociedad Nacional de Minería, Petróleo y Energía (SNMPE), protests in the first 23 days of 2023 alone cost an estimated US$160m of mineral production. Lost copper production has been particularly frustrating for the government, coming at a time of low supply and high prices on the global market.
The impact on mining has been exacerbated by the concentration of protests and road blockades in the south of the country, which is also the area with the largest concentration of mines. The perennially troubled Las Bambas copper mine, owned by China’s MMG, was again forced to close from 1 February to 10 February due to shortages of supplies caused by road blockades in the Apurímac region. Protesters also forced a temporary halt to operations at the Antapaccay copper mine, owned by the Switzerland-headquartered Glencore, on 20 January; this came after protesters stormed the mine, torched buildings, and looted workers’ belongings. Whilst Antapaccay swiftly resumed partial operations, production has been hampered by shortages of key inputs.
Blockades on the ‘mining corridor’ highway, a key transport route for Las Bambas and Antapaccay, were lifted on 22 February, raising hopes of a return to normal. At the time of writing on 9 March, however, protests looked set to pitch the mining sector into turmoil once again. Community leaders from the villages of Chumbivilcas and Espinar, which lie on the mining corridor in Cusco region, announced on 4 March that they would once again blockade the crucial access road.
Tourism
The Peruvian tourism and travel sectors have experienced major disruption due to roadblocks and airport closures. Critical infrastructure was repeatedly targeted by protesters, forcing repeated closures of airports in the cities of Cusco, Arequipa, and Juliaca. Airports in Puno and Huancabamba were also forced to close their doors temporarily in December. At the same time, roadblocks made much domestic travel impossible for long periods, particularly in southern Peru.
Several governments in Europe and North America warned their citizens against non-essential travel to Peru on account of the unrest. For those tourists that did arrive in the country, a number of the country’s star attractions were closed. Machu Picchu and the Inca trail network reopened to tourists on 12 February after being closed on 20 January following damage to the train tracks that left over 400 people stranded in Aguas Calientes, the town at the foot of Machu Picchu. Although the decision to reopen the site suggests some confidence that the protests may be starting to peter out, tourists are likely to remain cautious about booking trips for the coming months, especially as Cusco, the starting point for most visits to Machu Picchu, has been affected by violent protests. The archeological complex is the main draw for most tourists to Peru, and tourism is a significant component of the nation’s economy, contributing over 2% of GDP and generating over 1m jobs.
Amidst the ongoing disruption, the Peruvian government announced on 28 February that more than 30 public-private investment projects worth almost US$9bn would begin in 2023 and 2024. Most of these projects are centred around improving road infrastructure, energy, and sanitation, according to José Salardi, head of the state agency for investment promotion (Proinversión), who acknowledged the importance of regaining investor confidence despite the political unrest.
The investment announcement suggests that the government still believes it can ride out the storm. But the political situation remains far from resolved; according to a poll by the Instituto de Estudios Peruanos (IEP), published 26 February, President Boluarte’s approval rating was just 15%, while her rejection rating was 77%. Congress fared even worse in the poll, with an approval rating of 4% and a rejection rating of 90%. Those figures, and the ongoing failure to bring elections forward, indicate that the unrest may be far from over.
IMF warnings
The International Monetary Fund (IMF) concluded an Article IV mission to Peru on 9 February, highlighting a number of challenges in its closing statement including slowing growth, high inflation, political uncertainty, and the risk of spillover effects from Russia’s war in Ukraine. The IMF predicted a slow improvement in economic activity, which it said remains constrained by weak external demand and fertiliser shortages.
The IMF also emphasised that President Boluarte will need to reach across the political divide to restore economic stability. It stated that “recent political developments suggest that the government needs to work across the political spectrum to restore confidence, preserve stability, accelerate structural reforms to boost economic activity, and tackle inequality, poverty, and weaknesses in the education and health systems.”