Peruvians went to the polls on June 6 to elect a new president. Pedro Castillo is leading Keiko Fujimori by 44,000 votes in an election in which 17.6 million cast their ballots. The result is yet to be confirmed by the election authorities.

A newly-edited book by one of the greatest Peruvian historians gives clues as to the future. Jorge Basadre’s intriguing “Risk in History and Its Limits” was first published in 1971 and examines the role of chance in history. Basadre magisterially applies this theme to Peruvian independence. He was fully aware of the latest developments in game theory and anticipated the power of computers to apply this theory. This great thinker is honored today with his portrait on 100 soles banknotes.

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Inspired by Basadre, there are five scenarios that could unfold once the election authorities proclaim the winner. Although scenario analysis and game theory are distinct concepts, scenarios allow for a simulation of the role of chance in history and in determining the future. The Peruvian case is an exciting starting point for such analysis because the country is deeply divided and each candidate appeals only to a small minority of the population.

The Two Candidates

Keiko Fujimori is the daughter of the former authoritarian president Alberto Fujimori. He is currently serving a 25-year prison sentence for human rights abuses committed during his tenure. The former president inherited a bloody insurgency led by two terrorist groups. The larger group, the Shining Path, espoused Maoist ideals similar to Cambodia’s infamous Khmer Rouge. The other group was the Marxist-Leninist Túpac Amaru Revolutionary Movement. Both groups were most active in the 1980s and early 1990s. Alberto Fujimori is credited with crushing them.

Keiko Fujimori still attracts public support because many Peruvians continue to be grateful to her father for navigating the country out of what seemed to be an intractable crisis. Along with the insurgency, Peru suffered chronic hyperinflation. The authoritarian elder Fujimori ended both insurgency and inflation. In the current election, his daughter won 13.41% of the vote in the first round, reaching the final round in the presidential election for the third time.

Keiko Fujimori lost the 2016 presidential election to a liberal candidate by a mere 41,000 votes even though her party won an absolute majority in the congressional election. Her deep unpopularity among a large number of Peruvians probably explains why she lost while her party won. The divided mandate — with Fujimori’s party dominant in congress and the presidency in her rival’s hands — was a recipe for disaster.

Following the 2016 election, the country went into a political free fall. New congressional elections and constitutional changes followed. Within one presidential term, four presidents have come and gone. The constitutional changes backfired spectacularly. Members of congress are no longer allowed to stand for reelection. This was supposed to make them more honest. Instead, they treat their one term as the only chance to extract their pound of flesh. Almost invariably, Peruvian members of congress have furthered their own personal interests over the interests of society. Naturally, voters are tired of the current political situation with its unresolved tensions between regions and classes. This benefited Fujimori’s unlikely political rival who could cast himself as an outsider.

Pedro Castillo is a rural school teacher and union leader. His parents were illiterate peasants; he is the third of their nine children. Castillo comes from one of the poorest regions of the country. As a relatively unknown presidential candidate, he remained under the radar of the mainstream press during the first round of elections. With 20 candidates competing to get into the second round, Castillo won a surprising 18.92% of the vote. His victory caught the Lima elites by surprise.

In Peru, political parties largely center around their founders. Castillo’s party, Perú Libre, revolves around Wladimir Cerron, who used to be the governor of a region in the Andean part of the country. Cerron draws inspiration from Cuba’s Fidel Castro and Venezuela’s Nicolas Maduro. He is believed to support surviving members of the Shining Path. Two former members of the Maoist terrorist organization will now take their seats in congress for Perú Libre.

Cerron shares legal troubles relating to corruption and campaign finance with the Fujimori family. Whereas Fujimori herself is still awaiting trial, Cerron has already been sentenced to four years and eight months. He is currently out on parole.

A Mess That Keeps Getting Messier

Even though the vote was held over a month ago, the election authorities are yet to declare an official winner. Fujimori has challenged the election outcome. She claims irregularities in the voting districts in the Andean region where she is extremely unpopular. The independent election authorities have rejected most of the challenges, some on entirely technical grounds. According to law, challenges must be lodged within three days of the election. The polls closed at 8.00 pm on July 6. Fujimori filed some of her challenges after 8.00 pm but before midnight on July 9.

To her supporters, the extra four hours do not matter because July 9 was still the third day after the election. The election authorities are mindful of this perception and perhaps this contributes to why they have yet to proclaim a winner. However, we can safely assume that Castillo will be proclaimed president-elect before July 28. That day marks 200 years of Peru’s independence and is the day the constitution provides for the swearing-in of a new president.

Even though Castillo is highly likely to take charge, wild speculation dominates both the news and social media. He has frequently made contradictory remarks about his future plans. His erratic comments and improvisational team-building have made many nervous. Tensions are rising while confidence in the economy is falling. Just three months after Castillo won the first round, Peru’s foreign exchange reserves have dwindled by 11%. They have largely been spent to prop up the country’s falling currency that has fallen by 8.4% against a weak dollar despite the measures. 

Capital is also fleeing the country. Even before the second round of elections, the business elite was “looking to get money out of the country.” Reportedly, $13 billion in bank deposits have left Peruvian shores in the last few months. Castillo’s plans to nationalize or heavily tax major industries such as mining, oil and gas have caused tremors among investors and the business community. The Andean leader has continued to call for a constitutional convention despite a majority in congress or among voters who oppose such an elaborate and expensive exercise. 

Castillo’s call for a new constitution has fueled economic anxiety. There is a fear that the rules of the game could change and Peru might retreat from a market economy. This could create massive problems for the country. Previous administrations have signed trade agreements and international treaties that commit Peru to certain market-friendly policies. Castillo’s incoming administration does not have as much leeway as it imagines, and ideological policies could have costly consequences for the economy.

Ironically, Peru’s economy was recovering from the COVID-19 crisis faster than those of neighboring countries. Rising commodity prices would have given the new government more money to redistribute to the rural and Andean areas that historically lag behind Lima and other coastal cities. Instead, a close election in a fragmented society has exacerbated a protracted ongoing crisis. There are five scenarios that could play out at this point in time. Let us go through each of them.

Scenario 1: Cooperation

The government and the people they govern could come together to address the main problems affecting the country. These include ramping up the COVID-19 vaccination campaign, improving Peru’s ailing health care and public education systems, creating employment for the millions who lost their jobs due to lockdowns, increasing prosperity in poor areas practicing subsistence agriculture, building more infrastructure and improving resilience against climate change. 

Under this scenario, Castillo would successfully earn the confidence of the majority of congress. Instead of drafting a new constitution, members of congress would agree on amendments to improve governance.

Although this would be an optimal scenario, it is unlikely to unfold. Peru’s new congress of 130 deputies is splintered among 10 parties. Three of them, commanding 44 seats, represent the right and the far right. Of these, 24 belong to Fujimori´s Fuerza Popular. Parties of the left hold 42 seats, with 37 from Peru Libre, the party of Castillo and Cerron. The remaining 44 seats are held by centrist parties. It is difficult to predict whom they’ll support. Some might back the government in exchange for favors for their regions or for themselves. Others might ally with the right-wing opposition, which is expected to ferociously oppose what they view as Castillo’s socialist experiments.

Scenario 2: Military Coup

The military could take over. Some retired officers have already appealed to the army to act against a Castillo government. Some of the 44 right-wing congress members might support such a coup. This scenario is also unlikely for now. Perú’s institutions are still strong enough to follow a constitutional process.

The military has not been in power since 1980. By then, the armed forces were divided between their own left-wing and right-wing camps. The left had seized power in 1968 in hope of doing many of the things now proposed by Cerron and Castillo. The right took over in 1975 in response to the macroeconomic consequences of leftist policies instituted from 1968.

Between 1990 and 2000, the military supported the elder Fujimori. The army liked his strong, authoritarian leadership at a time of hyperinflation and insurgency. In the latter part of the 20^th century, right-wing military coups typically took place when a country entered a political deadlock. Almost invariably, institutions failed, the government stopped functioning, the economy collapsed and violence increased, leading to a military takeover.

Peru has just had an election. A winner has emerged. A military coup — or even a civilian one supported by the military — would not fly. Only if Castillo and congress repeatedly fail to find a way to work together, govern the country and manage the economy, the military would risk an intervention.

Scenario 3: Hegemony Via a New Constitution

Cerrón and Castillo could circumvent congress, appeal directly to the people and change the constitution. Such a scenario would give them unbridled power. Peru would emulate the Ecuador of Rafael Correa, who managed to grab absolute power despite lacking a majority in congress by ushering in a new constitution.

Correa came to power in 2007 as part of the so-called Latin American pink tide, a term that refers to the election of left-wing governments in the region. He allied Ecuador with Hugo Chávez’s Venezuela and hoped to install a 21^st-century style of socialism. Correa boosted agricultural subsidies, increased minimum wage and sought to improve the standard of living by raising spending on social programs, especially health care and education.

Castillo is not as popular as Correa. Peru is highly fragmented. He got under 20% in the first round and has barely squeaked through in the second. A third of the voters want a new constitution, another third support some amendments to improve governance and the remaining third oppose any change. Therefore, the hegemony of the left is possible but improbable.

Scenario 4: Hegemony Through Weakening of Institutions

Cerron and his hardcore comrades could make a grab for power with or without Castillo’s support. First, they would appoint loyalists as employees of the state. Friendly prosecutors and judges as well as aligned teachers and generals would infiltrate different arms of the Peruvian state. With the help of loyalists in key positions, the left wing could circumvent congress and bend the constitution. Bolivia, Nicaragua and El Salvador are already experiencing this phenomenon.

Peru has huge mineral reserves and access to some wealth. Left-wing countries such as Venezuela, Cuba, Nicaragua and Bolivia in need of financial support could bolster their ideological counterparts in Peru. Even the likes of Argentina and Surinam could turn to Peru for help. Peru could emerge as the new version of Chavez’s Venezuela. As with the Chavismo experiment, such a scenario would eventually end badly. Peru’s previous left-wing experiments have all failed. 

Scenario 5: Impasse and Chaos

Castillo and the right-wing members of congress could clash bitterly. The latter are likely to oppose the new government with all the means at their disposal. Peru’s right-wing media is likely to create a narrative of scandals.

Peru’s present constitution has weaknesses pertaining to governance. It gives the president and congress ample opportunities to act against each other. The president could dissolve congress, which in turn could impeach the president. In fact, a supermajority could impeach the president in a single afternoon. Sadly, such bitter polarization is the most likely scenario. It could unleash chaos in Peru. Governance could fail and the country’s long-standing problems would continue to fester.

It is important to note that four of the five scenarios are not in the interest of Peru. Yet such scenarios dominate because its democracy is immature. Voting is compulsory. Those who do not vote are penalized. Yet the country demonstrates that elections and voting by themselves do not lead to a functioning democracy.

Elected representatives have to learn to work together in the public interest. Putting private interest or ideological pursuits over public benefit invariably leads to disaster. Like voters in many other fraught democracies, Peruvians tend to opt for el mal menor, the lesser evil. It is increasingly unclear if such a choice even exists. A fragmented country desperately needs its politicians to end a savage knife fight and work toward a better future.

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.