| Political crises have not held back economic reform in Peru, although the risk is always present. While paramilitary groups have resurfaced (as the now-resolved hostage crisis at the Japanese ambassador's residence all-too-publicly demonstrated), the economic programme should stay on course in the medium term. The government's resolve to keep the reform momentum going means that investors should not be put off by the country's less than straightforward path to democracy. There are plenty of opportunities in Peru for knowledgeable investors. Instruments which mitigate political risk, such as the securitization deals recently closed by mining companies Southern Peru Copper and Cerro Verde, are popular. Meanwhile, there is a frozen loan pipeline thawing out after the tequila crisis. International issues, such as the recent Ferreyros ADR, are also on the rise. In a recent television appearance, president Alberto Fujimori discussed the crime wave he believes is responsible for attacks against opposition party members. He denied that right-wing paramilitaries are marauding the streets. According to Fujimori, thieves are so plentiful in Peru now, that given the law of averages they are bound to hit a sensitive political target or two. Such a lively political situation begs the question: can Fujimori keep the armed groups, the opposition and the current account deficit under control? True to form, he is expected to simultaneously tackle these problems with varying degrees of success. |