For days Peru has been rocked by protests against increased fuel and food prices. President Pedro Castillo, who has just escaped impeachment, is teetering on the menace. In other countries in the region, too, the increased prices caused by the Ukraine war are causing resentment.
Angry citizens demonstrated against President Pedro Castillo’s government on Tuesday. He had tried to suppress the protests with a curfew.
For days Peru has been shaken by protests against high food and fuel prices. At least five people have died since the weekend. Dozens of people were injured, including many police officers. President Pedro Castillo had further fueled the anger of the citizens by declaring a curfew for the capital Lima and neighboring Callao on Tuesday night. This was to suppress protests. But after just a few hours, Castillo rowed back and lifted the curfew.
He had previously been accused of violating fundamental rights with the curfew. Residents were angry about the measure. As in the previous days, demonstrators on Wednesday demanded the resignation of the Marxist village school teacher, who has governed Peru for eight months. Violent clashes with the police broke out in Lima, and the Palace of Justice is said to have been looted. Demonstrations and roadblocks also continued in other parts of the country.
Castillo had tried to soothe tempers by cutting fuel taxes and raising the minimum wage by 10 percent from May. But since the sanctions against Russia are making fertilizers, which are important for agriculture, more expensive and fuel prices are continuing to rise as a result of the Ukraine crisis, relief is unlikely to come any time soon. In March, inflation in Lima was seven percent above the previous year’s level, the highest increase in 24 years.
Battered President
Since taking office eight months ago, Castillo’s popularity has fallen sharply due to a sometimes chaotic government work. Observers believe that he will not remain in office much longer. It was only at the end of March that he had survived the second impeachment procedure of his term. The opposition, which commands a majority in Congress, accuses Castillo of a long list of misconduct, including condoning corruption and “moral incompetence”.
The Marxist with the white cowboy hat is the fifth president to rule Peru since 2018. Two of his predecessors were forced out of office through impeachment proceedings. Castillo’s start in office was bumpy. First the counting of the votes became a week-long stalemate, then Castillo stumbled his cabinet formation, which was also due to his political inexperience. The opposition’s blockade and Castillo’s constant restructuring of his cabinet have so far produced political deadlock.
Inflation creates problems in the region
Like other Latin American countries, Peru has been hit hard economically by the pandemic and the ensuing supply chain crisis. Now the Ukraine conflict brings new challenges, especially for agriculture and the transport industry. It is true that resource-rich countries such as Peru can benefit from the increased commodity prices. But first, inflation will hit the region. Brazil and Chile have already had to tighten interest rates significantly after inflation approached the ten percent mark in each case.
Violent protests against high fuel prices broke out in Ecuador at the end of last year. The topic is extremely sensitive in the country, since the poor citizens are dependent on subsidized fuel prices. In 2019, there were nationwide protests after then-President Lenín Moreno abolished the subsidies and fuel prices rose sharply as a result.
In Argentina, too, fuel prices are threatening to trigger social hardship. The country is rich in gas and a heavyweight in the global food industry. However, the threatening shortage of fuel hits the harvesting operation in agriculture, which is currently running at full speed, painfully. In view of the high fuel prices, there is even a threat of a strike in the transport industry. In order to guarantee domestic supplies, Argentina’s government recently increased export taxes on soy products.
Fuel and food are expensive in Brazil
In Brazil, dissatisfaction with high inflation and expensive fuel is growing. President Jair Messias Bolsonaro knows how explosive the situation can be for him half a year before the presidential elections. In 2018, a truck strike for cheaper diesel had brought the government of then President Michel Temer to the brink of collapse. The diesel price today is almost twice as high as it was during the strikes four years ago.
The semi-public energy giant Petrobras reflects the prices on the international markets in its pricing policy. Bolsonaro is currently on the hunt for a new Petrobras president who would be willing to cut fuel prices. If necessary, the group will be privatized, Bolsonaro threatens. In addition, Brazil’s agriculture is suffering from the increased fertilizer prices. The prices for groceries in Brazilian supermarkets are currently around 13 percent higher on average than they were a year ago.