A continuing wave of violent protests in Peru shows how the Russian invasion of Ukraine is affecting markets around the world, causing unrest and deepening political divisions, CNN reported.
Initially, rising fuel prices sparked protests that began last week, but quickly intensified into large anti-government demonstrations with marches and roadblocks.
According to Peruvian authorities, at least six people lost their lives during the protests, despite the authorities struggle to control the situation.
At least nine major roads in the country remained blocked by protesters.
Late Monday, the president, Pedro Castillo, declared a state of emergency and set a curfew in the country’s capital, but withdrew the order Tuesday afternoon as hundreds of protesters who ignored the measure took to the streets of Lima to demand his resignation.
Why Peru?
Political unrest is not new in Peru. The country has had five presidents in the past five years, including one who has been impeached and removed from office. And Castillo himself has already risen – and survived – with two impeachment votes since taking office in July.
Peru has been fertile ground for protests in recent years, but the current crisis has been sparked as a direct result of the war in Ukraine.
The long aftermath of Putin’s war
Russia’s invasion of Ukraine – and the subsequent decision of world leaders to isolate Russia from world oil markets – has led to rising oil prices.
And for Peru, the impact is particularly severe.
Compared to other countries in the region, such as Argentina or Venezuela, Peru imports most of its oil. This made it more exposed to the recent surge that hit the economy just as it was recovering from the impact of the Covid-19 pandemic.
As a result, inflation in Peru in March was the highest in 26 years, according to the country’s statistical institute. The most exposed segment is food and fuel, with prices rising 9.54% last year, the Peruvian central bank said.
Because prices were rising so fast, it didn’t take long for the protests to spread across the country. And on March 28, a group of transport workers and a truck drivers’ union called for a general strike to demand cheaper fuel.
In the last few days, other organizations and groups have joined the protests, with some regions closing schools and resorting to online training.
Before becoming president, Castillo was a union leader and teacher at a small school in rural Cajamarca, pushing for better wages and working conditions.
Now its main constituency, the urban working class in the suburbs of Lima and rural farmers across the country, are particularly hard hit by the inflation spiral because they pay higher prices for food and transport.
This further undermines his political support.
What next?
It is difficult to predict how the situation will develop.
Even before the curfew was issued, Castillo had already made some concessions by lowering fuel taxes and raising the minimum wage to 1,025 solos – about $ 280 – on Sunday. But it also failed to calm the situation.
After his curfew order was called back, the president seems to be running out, given that Peru cannot control international oil prices.
As the conflict in Ukraine continues to rage, the current inflationary climate is projected to continue.
Any further subsidy for lower fuel prices will increase Peru’s debt and further damage its finances.
However, Peru’s situation is far from unique and Castillo is not alone.
Other leaders face the same difficult choice of how to deal with rising inflation as they try to sort out their finances after the chaos caused by Covid-19.
As the crisis deepens, Peru may seek answers from other countries.
