Peru’s So-Called Paradox, by Stephan Gruber – 15 August 2026

The election of Keiko Fujimori empowers an extractive growth regime

On July 28, Keiko Fujimori, daughter of Peru’s former dictator Alberto Fujimori, was inaugurated as the country’s incoming president. After three previous failed attempts at the office, Fujimori succeeded by promising to bring an end to a decade of intensifying crises in Peruvian politics: she will be the tenth president to serve in the past ten years in Peru due to a series of impeachments, resignations amid corruption scandals, and fragile party coalitions. She won the second-round election with 50.13 percent of valid votes—the slimmest-ever margin for a presidential election.

The country’s political instability has long coexisted with surprising macroeconomic stability: consistently low inflation and a sound currency. This contrast between politics and economics is widely referred to as the “paradox” of Peruvian political economy. It is attributed, both domestically and internationally, to the country’s efficient technocracy, particularly its longtime central bank president Julio Velarde and his fierce management of the country’s monetary policy. With vows to stabilize party politics and guarantee macroeconomic security by reelecting Velarde, Fujimori presented herself as uniquely able to bring the paradox decades to an end.

The hypocrisy of these claims is apparent. Since 2016, Fujimori and her party, the right-wing Fuerza Popular, have engineered a significant portion of this political chaos by consistently working to obstruct the government. In 2022, Fuerza Popular conspired with Congress to oust the leftist president Pedro Castillo in favor of Castillo’s vice president, Dina Boluarte, who murderously repressed the large protests that ensued in the wake of Castillo’s impeachment and imprisonment. Boluarte’s government, both illegitimate and unpopular, honored its alliance with Fuerza Popular by instituting three days of national mourning for the death of Alberto Fujimori, who was sentenced to twenty-five years in prison for human rights abuse and corruption but pardoned on humanitarian grounds in 2017.

Moreover, the framing of the Peruvian paradox itself misconstrues the relationship between the country’s political and economic spheres: Peru’s political and democratic decline is in fact intimately related to its macroeconomic status quo. Since the introduction of the country’s 1993 Constitution, a growth model centered on extractive commodity exports—particularly mineral exports—has consistently generated social and environmental conflict while doing little to reduce stark territorial and urban inequalities, overcome informality, or durably eliminate poverty. This model is predicated upon the need for constant foreign direct investment (FDI) and large foreign reserve accumulation, which further strengthens extractive industries and weakens alternative drivers of investment.

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Stephan Gruber is a senior researcher at Institute Max Planck for the Study of Societies, Cologne, Germany.

Peru’s So-Called Paradox, by Stephan Gruber – 15 August 2026

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