Exercise 3

Exercise 3 - Jorge Rossello PeruElectionAlarmsInvestors

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Jorge Rossello Peru Election Alarms Investors Stocks Fall After Populist and Daughter of Ex-Autocrat Reach Presidential Runoff By MATT MOFFETT And ROBERT KOZAK LIMA, Peru—No sooner were the leftist Ollanta Humala and center-right Keiko Fujimori confirmed Monday as rivals in the June presidential runoff election than stocks in the once booming local exchange fell into a tailspin, declining more than 3%. The outcome of Sunday´s first-round presidential election has raised a cloud of uncertainty over what has quietly been one of the world´s top performing economies. Peru has enjoyed 12 consecutive years of growth thanks to prudent market-oriented policies and surging commodity prices. But the prospect of a government by Mr. Humala, a populist former army officer, or Ms. Fujimori, the daughter of an imprisoned former president who was known for corruption and an iron-fisted style, has given the business community pause. "It's not going to stop the economy, but it will cause investors to raise questions," said Julio Carrion, a political scientist at the University of Delaware. Mr. Humala is clearly the biggest worry in that regard. The 48-year-old former military officer has tried to moderate his image since narrowly losing the 2006 election. But Mr. Humala hasn't done much to change his governing plan, "which in the main part is aimed at increasing the role of the state in the economy," said Roberto Flores, an economist with brokerage Inteligo SAB. "So there would be risks of important changes to the model." Mr. Humala has said he might favor a return to Peru's 1979 constitution, which gives the state ownership over natural resources. He also said he opposed exporting natural gas extracted from massive blocs 88 and 56 of Peru's Camisea natural-gas project. U.S.-led consortium Peru LNG is producing liquefied natural gas for export from the Camisea blocs. Peru LNG has so far declined to comment. Mr. Humala also has broached calling together a new constituent assembly to write a new constitution. The current one, Mr. Humala says, is tainted because it was rammed through by Ms. Fujimori's father after he suspended many basic rights with the backing of the military. "This would be very dangerous and create a climate of instability for a long time," said Humberto Speziani, head of Peru's largest business group, Confiep. Fernando Rospigliosi, a former interior minister, wrote in a newspaper column that he expected Mr. Humala to try to apply a standard populist playbook used by Venezuelan strongman Hugo Chávez by leveraging huge currency
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Jorge Rossello reserves, $47 billion in Peru's case. "With that immense quantity of money. ..he will give away anything that occurs to him, subsidize natural gas, gasoline, bread and other products," Mr. Rospigliosi wrote.
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This note was uploaded on 04/26/2011 for the course GEOG 120 taught by Professor Whitmore during the Spring '08 term at UNC.

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Exercise 3 - Jorge Rossello PeruElectionAlarmsInvestors

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