The mood in Lima’s financial district this week was one of grim uncertainty. Peru’s presidential election, a knife-edge contest between populist and conservative candidates, has set alarm bells ringing among British investors who hold billions in mining, energy and infrastructure assets across the country. The source of their anxiety is not ideology alone, it is the cold reality of rising crime and political instability.
Sources close to the British Embassy in Lima confirm that corporate risk assessments have been upgraded to ‘red’ in recent weeks. The private security briefings held in the City of London last month, attended by fund managers from firms with a combined $8 billion exposure in Peru, painted a picture of a state struggling to maintain order. ‘The insecurity we are seeing is unprecedented. Investors are looking at the riots in Chile and the collapse of governance in Venezuela, and they are asking if Peru is next,’ said a senior analyst at a London-based emerging markets consultancy.
The numbers bear this out. Homicides in Peru have surged by 40% since 2019. Extortion and kidnappings, once rare in the capital, are now a daily reality for businesses. The National Police are undermanned and underfunded. In the poor northern mining regions, illegal gold extraction funds armed gangs that operate with impunity. The state’s writ, it seems, extends only as far as the barracks.
Both leading candidates, leftist Pedro Castillo and right-wing Keiko Fujimori, have promised crackdowns on crime. But the market remains sceptical. Castillo’s economic proposals, including nationalisation of key industries, have already spooked investors. His rival, Fujimori, carries the stain of past corruption allegations. Neither inspires confidence.
‘The election is a choice between the devil and the deep blue sea,’ one British mining executive told me over a guarded dinner in Miraflores. He spoke on condition of anonymity, given the sensitivity of his company’s ongoing negotiations with the Peruvian government. ‘We have a $2 billion copper project in the south. If Castillo wins, that project is dead. If Fujimori wins, we will face years of legal challenges from her opponents. Either way, we are looking at delayed returns.’
The British government, for its part, is treading carefully. The Foreign Office has issued travel advisories warning of potential unrest around the election. Trade missions have been quietly postponed. ‘We are not hitting the panic button yet, but we are certainly watching the dials,’ a diplomatic source said.
The real fear is what happens after the votes are counted. Peru has seen five presidents in the past five years. The last election, in 2016, was followed by a period of political paralysis that scared off investment and sent growth to a standstill. A repeat of that scenario, combined with escalating violence, could trigger a capital flight that would devastate the sol and cripple the economy.
For British investors, the stakes are high. The UK is the third-largest foreign investor in Peru, with over £8 billion in stock. The portfolio spans from the huge Antamina copper-zinc mine to water utilities in Lima. If Peru’s democracy falters, these assets could become stranded.
‘The bottom line is simple,’ the executive said. ‘We need stability. We need a government that can control the streets and honour contracts. Right now, we have neither.’
As the polls show a dead heat, the waiting game begins. In the smoky bars of San Isidro and the hushed corridors of the British Embassy, one question echoes: how long before the uncertainty turns into a full-blown crisis?
Peru’s next president, whoever he or she may be, will inherit a country on the brink. And the British investors who once flocked to this resource-rich nation are now wondering if it is time to get out.
