Bloomberg News

Fujimori Concedes Defeat in Peru Presidential Elections

June 06, 2011

(Adds Fujimori quote in second paragraph.)

June 6 (Bloomberg) -- Peru’s Keiko Fujimori conceded defeat in yesterday’s presidential election to Ollanta Humala, who won a narrow victory as voters overlooked his past support for Venezuela’s Hugo Chavez and rallied behind his pledges to stamp out corruption and extend a mining boom to the nation’s poor.

Fujimori, speaking to reporters in Lima, said she will lead a responsible opposition and “build bridges” with Humula’s government. She said she will offer him her personal congratulations in a meeting later today.

“I recognize his triumph,” said the 36-year-old congresswoman. “It’s important that the country continues its economic course and that it has clear rules”

Peruvians, fearful of reviving the political trauma associated with the authoritarian rule of Fujimori’s father, Alberto Fujimori, opted for a former army rebel who advocates greater state control of the country’s natural resources. Many voters doubt the sincerity of Humala’s transformation from a one-time ally of President Chavez to a defender of policies that have made Peru the fastest-growing economy in Latin America over the past decade.

Peru’s benchmark stock index plunged a record 12.5 percent and Peru’s currency and bonds dropped as investors dumped Peruvian assets on concerns Humala, 48, would freeze $50 billion of mining, energy and infrastructure investment. The Lima General Index’s decline was the biggest since its creation in December 1981. After shares plunged, trading was suspended for the first time since the global financial crisis.

Bonds Tumbled

Dollar bonds tumbled, sending borrowing costs to the highest in four weeks. Yields on dollar bonds due 2037 rose 19 basis points, or 0.19 percentage point, to 5.93 percent, according to data compiled by Bloomberg.

Last night, Humala said he would seek broad backing for his policies and form a government comprised of the most-qualified people independent of their political affiliation.

Humala may appoint an ally of former President Alejandro Toledo to head the Finance Ministry, Omar Chehade, the President-elect’s running mate, told Canal N today.

Instead of looking to Chavez, Humala now says he’d emulate the pro-market policies of former Brazilian President Luiz Inacio Lula da Silva, and hired two of his former aides as campaign advisers.

Chavez today said Humala’s victory is “part of this dynamic of this world awakening to a new era.”

Southern Copper

Like Chavez, who as a paratrooper in 1992 led a coup attempt, Humala as an army lieutenant colonel in 2000 led 50 soldiers who seized and occupied for a week one of Phoenix-based Southern Copper Corp’s mines to protest corruption in Fujimori’s government. His brother, Antauro Humala, is in jail for killing four policemen during the takeover of a highland town in 2005.

The Nationalist Party candidate also abandoned the rhetoric against foreign mining and natural resource companies he used during the 2006 campaign, when he lost the presidency to Alan Garcia by five percentage points.

In the final days of the campaign Humala stepped up attacks on Fujimori, accusing her of turning a blind eye to the corruption and human rights abuses when she served as first lady during her father’s decade-long government, which ended in 2000.

Water, Sewage

Humala’s candidacy ignited the hopes of a third of Peru’s population that hasn’t benefitted from the economic boom. While a decade of growth averaging 5.6 percent has spurred employment and doubled per capita income to $5,224, as many as 80 percent of homes still lack running water and sewage in the state of Huancavelica, according to a United Nations study last year.

Humala pledges to curb tax evasion and raise mining taxes to finance higher social spending, and says he’ll resolve conflicts between farmers and mining companies that have caused companies including Southern Copper to shelve investments.

Peru is the world’s biggest silver producer, and third in copper and zinc. Mining investment helped bring in $7.3 billion in foreign direct investment last year and helped fuel growth above 7 percent for the past 13 straight months.

Many Peruvians voted for Humala simply to thwart Fujimori amid fears her victory could revive the corruption and authoritarian rule associated with her father, Coletta Youngers, a senior fellow at the Washington Office on Latin America.

Elder Fujimori

The elder Fujimori, after slashing 7,650 percent inflation, saw his government collapse after his intelligence chief, Vladimiro Montesinos, was caught on videotape in 2000 bribing lawmakers. He’s now serving a 25-year prison sentence for directing a paramilitary death squad that killed civilians during a war against the Shining Path, a Maoist insurgency.

Chehade said today that the 78-year-old Fujimori would likely be transferred to an ordinary prison from the police station on the outskirts of Lima, where he tends a garden and takes music lessons.

“Many who had been reluctant to endorse either candidate opted for Humala to prevent the return of a political movement responsible for the most corrupt government in Peruvian history,” said Youngers.

--With assistance from Andrea Jaramillo in Bogota, Eduardo Thomson in Santiago, Alexander Emery in Lima and Richard Jarvie in Buenos Aires. Editors: Richard Jarvie, Joshua Goodman

To contact the reporters on this story: John Quigley in Lima at jquigley8@bloomberg.net; Helen Murphy in Lima at hmurphy1@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net


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