Peru’s Asian dynasty pulling strings in the background

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People hold a banner with the colours of the Peruvian flag as they march against President Pedro Pablo Kuczynski's pardon for former president Alberto Fujimori in Lima, Peru on December 28, 2017. Photo: Reuters / Mariana Bazo

Alberto Fujimori, the 79-year old former Peruvian dictator, was pardoned this week despite being only partway through a 25-year sentence for rampant corruption, vote-rigging and organizing a paramilitary death squad that murdered two dozen civilians loyal to the Maoist Shining Path insurgency back in the 1990s.

According to Peru’s President Pedro Pablo Kuczynski, Fujimori suffers from heart arrhythmia and cancer so he’ll be allowed to go home and die peacefully with his family. But Peruvian leftists still protesting his release in the streets say the pardon was payback for Fujimori’s youngest son Kenji, 37, abstaining from a legislative attempt to impeach Kuczynski earlier this month. Ironically, the impeachment effort in Peru’s unicameral Congress was directed by Fujimori’s daughter Keiko, who heads the majority political party to which Kenji also belongs.

Welcome to Peru, (pop. 31,036,000), an Andean nation where people know all the players but aren’t always sure about the game being played. Is the Fujimori family patriarch strong enough to influence the Fuerza Popular political party his two children now control? Does Kenji’s going against his sister’s impeachment play signal a schism in the family? Or was it just a tactical ploy that somehow will end up serving Keiko when she makes her third run at the presidency in 2021.

Asia has more than a passing interest in what happens in Peru. China, Japan, Korea and Thailand are heavily invested thanks to Fujimori who served as president from 1990 to 2000. Today China dominates hydrocarbon extraction in the Amazon Basin and accounts for more than 21% of the foreign direct investment in Peru’s mining sector. Because of its membership in the Asia-Pacific Economic Cooperation (APEC), Peru is Asia’s gateway to South America.

For the past 175 years Asians have been coming to Peru in search of economic opportunity. The country (South America’s third largest) is blessed with abundant mineral deposits and the fishery off Peru’s 2,250 kilometer coast is the world’s richest. Because of the geographic diversity a variety of crops can be grown on the fertile western slope of the Andes. East of the country’s mountain backbone, home of the ancient Inca Empire, lies a vast equatorial forest from which stems the headwaters of the Amazon River.

The first wave of 100,000 Cantonese began arriving in 1850 to work on large haciendas producing sugar, cotton and coffee. They soon were followed by 70,000 Japanese, who provided industrial labor and entrepreneurial skills. Today, Peru’s Asian community – the continent’s second largest – is unique in that its demographic prominence and economic clout complement a measure of political power unmatched elsewhere in the Americas.

The embodiment of that power during the 1990s was Alberto Fujimori, a bespectacled mathematics professor whose parents moved to Peru in 1934 from Kumamoto Prefecture in Japan. Following his election in 1990, Fujimori initiated a series of pro-business policies designed to reverse decades of economic decline. To implement the changes he appointed a number of first generation Peruvians of Japanese and Chinese descent to run the government ministries responsible for trade and industrial development.

During his first months in office, Fujimori – or El Chinito (Little Chinaman) the nickname he received from Peruvian voters – lifted foreign exchange restrictions, abolished price controls, repealed the capital gains tax and simplified the country’s convoluted tariff structure. Later he eliminated the cargo quotas and over regulation that had made Peruvian ports the most expensive on the Pacific coast. By the end of his first year in office the 396% monthly inflation rate he inherited had dropped to double digits and the privatization of state monopolies was well underway.

Fujimori made no secret of his Asian tilt. In one of his first visits to Seoul he granted Korea the right to construct an industrial duty-free zone for its companies in a place of its choosing along the Pacific coast. He then offered the Daewoo Corporation a concession to build a 450-km highway linking the Peruvian port of Ilo with the Bolivian border. The latter overture was especially significant since it not only made Daewoo a licensed Peruvian contractor but also opened South America’s landlocked interior to Korean products.

By early 1992 many Peruvians were wondering if their President ever would find a solution to the terrorist plague. Fujimori gave them his answer on April 5 when he dissolved Peru’s Congress and dismissed the judiciary, claiming both were impeding his fight to stabilize the economy and eliminate subversion. Predictably, western governments denounced the “self coup” and the eight months of authoritarian rule that followed. But the number of political killings fell 50% as the result of his actions.

Washington especially was displeased with Fujimori’s dissolution of democracy, but it knew change was coming. Five months before the coup Fujimori in a speech to the Asia Society in Hong Kong indicated he would do whatever necessary to keep his economic reforms on track. “We have taken drastic measures to stabilize the economy and bring an end to the uncertainty created by hyper inflation,” he said. “To avoid undercutting the total economic program, we have had to maintain iron-clad fiscal discipline – in an Oriental way – and we continue to maintain it.”

The Fujimori pardon shifts the spotlight to his 42-year old daughter Keiko, a Columbia University MBA who has been close to the center of Peruvian politics since she became the country’s “First lady” at age 19 following the divorce of her parents. There is no love between Keiki and Kuczynski, who defeated her by less than half a percentage point in the 2016 presidential election. But she must be grateful for his action since she promised in 2016 that she would never pardon her father for his crimes.

“Today is a great day for my family and for Fujimorismo” she said upon learning of her father’s release.”Finally my Dad is free. This will be a Christmas of hope and happiness.”

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