Article Link: https://oilprice.com/Energy/Crude-Oil/Perus-Oil-Crisis-Is-Worsening.html
In what can only be described as a series of crises, Peru’s economy is in serious danger of decline. As if the pandemic hasn’t been damaging enough, recent political instability has had serious impacts on the country’s economy, specifically in its oil economy.
Following the impeachment of Vizcarra, Peru went through three presidents in only one week (in November). Each new president has incited protests and significant civil unrest, causing Peru’s GDP to drop 14%.
Many issues in Peru’s economy are results of division between the rich and the poor, as well as division between Peru’s indigenous population and the central government. The inequitable distribution of resources and dissent among the indigenous population has caused constant violent protests against oil companies and the Peruvian government.
All of these factors, including COVID-19, the lack of clear and consistent leadership, and social cleavages have culminated in a worsening oil crisis that is severely restricting the growth of the Peruvian economy.
Unfortunately, it seems that there is no easy way for the Peruvian government to approach this economic crisis in a time where there is not only a global pandemic, but also increasing hostility towards the oil industry after a long history of environmental damage in the Amazon. Due to the lack of a clear and well-supported leader, Peru has been unable to formulate an appropriate response to this crisis.
For now, it is probably best that Sagasti (the president until elections can be held in April) does his best to unite the country and project some semblance of consistency and dependability during these chaotic times. If Sagasti is able to placate the people (which would prevent a continuation of violent protests), then Peru will hopefully be in a good enough place to elect a competent leader this coming spring, instead of continuing a cycle of electing under-qualified and unliked presidents.
Due to the various overlapping factors that have contributed to this economic decline in the oil sector, using the levels of analysis that we learned in class makes the entire situation much more digestible. On a global level, there’s the COVID-19 pandemic, which has had tremendous impact on the oil market specifically, as there is much less demand now that people are generally staying in one place.
On the state level, there are many social cleavages that are woven into Peru’s culture that can account for this unprecedented level of political disunity. While there are huge gaps and tension between the rich and the poor, there are also constant violent confrontations between Peru’s indigenous population and their government, which exacerbate the oil crisis as there is dissent over the distribution of those resources as well as the environmental processes used to extract them.
Lastly, on an individual level falls Vizcarro, Sagasti, and all of the other recent Peruvian presidents who have failed to foster a sense of political stability. Peru is trapped in a cycle of electing incompetent leaders who last for very short periods of time due to violent citizen protests, and these corrupt individuals have definitely played a role in Peru’s worsening oil crisis.
Overall, the levels of analysis can be used to analyze Peru’s oil crisis from different perspectives, which is always important in the realm of international relations, as current events involve a lot of nuance, which isn’t accounted for when only looking at things in terms of cause and effect.