Impeachment Loses Steam in Peru But Finance Chief Still at Risk

(Bloomberg) — Peruvian President Martin Vizcarra seemed poised to survive impeachment proceedings after opposition lawmakers said they would back away from initial efforts to oust him to avoid escalating a political crisis amid a devastating pandemic.

Pro-impeachment leaders who accuse Vizcarra of trying to obstruct a graft probe said they still want him investigated but would no longer support his ouster after a local website reported head of congress Manuel Merino, first in line to replace the president, may have sought the support of the military to remove him from office.

The government was quick to seize on the report, which stirred memories of the country’s past dictatorships, with Cabinet Chief Walter Martos saying in a televised address on Saturday that “anti-democratic sectors” with “hidden interests” were trying to destabilize Peru’s democratic order. While lawmakers are still scheduled to vote on Vizcarra’s impeachment by the end of the week, Martos said the government will ask the Constitutional Court on Monday to halt the proceedings.

At least two political parties have since announced they will withdraw support for the motion against Vizcarra, with Daniel Urresti, the spokesman for We Can, criticizing “dark maneuvers” by Merino. Alliance For Progress founder Cesar Acuna, whose party provided about a third of the votes in favor of starting impeachment proceedings on Friday, said on Twitter that the process would worsen the political crisis.

The Peruvian sol gained 0.4{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49} against the dollar at 9:07 a.m. in Lima, after falling the most in three months on Friday.

Yet the turmoil is far from over, with lawmakers also set to vote on a separate motion to ouster Finance Minister Maria Antonieta Alva, whom they accuse of not doing enough to prevent the economic slump during the pandemic. Debate on Alva‘s censure motion is scheduled to start this morning.

The political instability risks weighing on a nation already battered by Covid-19. With the world’s highest per-capita deaths from the coronavirus, Peru’s gross domestic product shrank by 30{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49} in the second quarter, the worst slump of any major economy.

“While his opponents do not yet seem to have enough support to unseat him, President Vizcarra’s position seems likely to be weakened and the increased political uncertainty will likely imply a slower recovery of the economy from the COVID-19 shock,” wrote Barclays Plc economist Alejandro Arreaza in a note Monday.

Power Struggles

If Vizcarra is impeached, the head of congress would replace him until the next general election, which is due in April. Vizcarra has said he won’t seek another term.

Vizcarra is the second Peruvian leader facing impeachment proceedings in less than three years. His predecessor, Pedro Pablo Kuczynski, resigned after an opposition lawmaker released videos that showed his allies apparently negotiating votes to stave off his ouster. Two other former presidents are under investigation for graft and another one is in prison.

Since replacing Kuczynski in 2018, Vizcarra, 57, has tried to overhaul the nation’s judicial and political systems, frequently clashing with lawmakers in the process. He dissolved the previous legislature last year.

Prosecutors and lawmakers this year began probing alleged irregularities in the government’s hiring of a little-known singer to give motivational talks at the Culture Ministry. Richard Cisneros, the singer in question, is alleged to have used contacts in the presidential palace to obtain contracts totaling about $50,000.

On Thursday morning, lawmakers heard tapes of Vizcarra appearing to speak to officials about Cisneros’ visits to the presidential palace. Less than 12 hours later, they presented a motion to unseat him.

(Updates with analyst’s comment in fifth paragraph)

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