A fist-fight in the congress of a failing state. It sounds like a fever dream from the Year of the Four Emperors, but no: this is Peru, 2024, where the presidency hangs by a thread and the country’s institutions are crumbling like the aqueducts of old Rome. Two rivals, Dina Boluarte and her congressional foes, have escalated from procedural bickering to physical violence. The footage is pure Rome: togas replaced by suits, but the impulse to settle a political crisis with fisticuffs is as old as the Republic itself. Yet the implications for British investors are far from comedic. They are dire.
Consider the numbers. Peru’s crime rate has swollen to blood-soaked proportions: murder is up 20% year on year, and extortion paralyses Lima’s commerce. The economy, once a darling of emerging markets, is now a basket case of inflation, labour unrest, and plummeting copper prices. The new government – if it can be called that – is a circus of incompetence and corruption. The latest brawl is merely the symptom of a deeper rot: a collapse in the rule of law, a loss of faith in institutions, and a populace so desperate that it turns to violence as a form of political expression.
But let us cast a colder eye on this chaos. For the British investor, Peru was supposed to be a safe harbour: a stable democracy, resource-rich, and pro-trade. Now that harbour is sinking. The FTSE 100 has already felt tremors: shares in Antofagasta, the Chilean miner, have dropped on fears that political instability will spill over the border. More directly, British pension funds with exposure to Peruvian government bonds are nursing losses. The spread on Peru’s sovereign debt has widened by 150 basis points in a month. That is not a tremor. That is a seizure.
The historical analogy is not the Fall of Rome here, but the 1980s debt crisis. Then, Latin American regimes collapsed under the weight of populist borrowing and commodity busts. Peruvian presidents defaulted, hyperinflated, and fled. We are witnessing a repeat, with the added spice of narco-crime and mass migration. The difference is that British investors today have fewer safe harbours. The world is smaller, and contagion travels faster.
What is to be done? The Foreign Office’s travel advice is already shrill: avoid all but essential travel to Lima, avoid all travel to the interior. But for capital, the message is clearer: get out. Sell Peruvian assets. Hedge with Mexican or Chilean bonds. The window for exit is closing. Soon, Peru will be a case study in how quickly a ‘success story’ can revert to a failed state. The fist-fight was the tipping point.
I do not merely predict doom. I diagnose a civilisation in retreat. The Peruvians, like the Romans, have lost the art of governance. They have substituted spectacle for substance, brawls for debates, and corruption for competence. British investors, who once financed the Peru-Colombia railway, now must learn the lesson of history: when the caudillos start throwing punches, it is time to leave the arena.
The choice is simple. Either Britain divests from a sinking ship, or it accepts the consequences: a flood of exiled Peruvian capital, a spike in sovereign risk, and the slow erosion of its own portfolio. The only question is: will we learn from history, or repeat it?
