Peru’s elite, in panic over Castillo’s likely victory, stash cash at home or abroad

RIO DE JANEIRO, BRAZIL – In Lima, Peru’s capital, concerns are growing among the small but powerful urban elite about the likely election of a virtually unknown socialist professor as president of the country.

Pedro Castillo is about to be declared president. With almost all the votes tallied, his lead over conservative rival Keiko Fujimori is small, but seems to be enough, although the final result could still take days or even weeks due to legal challenges.

During the campaign, Castillo pledged to sharply increase mining taxes in the world’s second-ranked copper producer to finance social spending, and to reformulate the constitution to give the government more weight in the management of the economy. He also hinted at potential land reforms.

Fujimoris’ conservatives were quick to exaggerate fears about the rise of communism and stir up old ghosts of land grabbing and a Venezuelan-style collapse. Illuminated signs appeared in the capital warning “Think about your future, say no to communism.” They did not mention Castillo, and no one has claimed responsibility.

“The party (Castillo’s) is Marxist-Leninist. He says he will change the Constitution, he will carry out expropriations. So if he does all that, it should be no surprise,” ex-Minister of Finance Alfredo Thorne said.

As his victory seemed more likely in recent weeks, Castillo has softened his rhetoric, pushing back comparisons with authoritarian leftists like Venezuela’s Hugo Chavez. He called in more moderate advisors, played a pro-market message, and denied his intention to nationalize or expropriate savings.

But many residents of the wealthier parts of Lima – who voted overwhelmingly for Fujimori – remain fearful.

“All my friends have put their money abroad, I don’t know anyone who hasn’t withdrawn their money,” said an attorney who serves on the boards of several large corporations and who has also withdrawn funds.

Some families are dividing property among relatives or putting them in trusts, she said, and in some cases withdrawing cash to keep it at home in suitcases.

However, analysts say that a fragmented Congress will limit radical change and force Castillo to be pragmatic, which may even create potential buying opportunities for investors.

Source Reuters