Leftist may win Peru vote, but runoff likely

(Note: election law forbids publication of polls in Peru a
week prior to April 10 voting)

* Leftist Humala expected to reach June 5 runoff

* Business-friendly candidates battle for second place

* Polls split on Humala’s chances in runoff vote

By Caroline Stauffer and Terry Wade

LIMA, April 10 (Reuters) – Lower-income voters are expected
to hand left-wing nationalist Ollanta Humala victory in the
first round of Peru’s presidential election on Sunday, but he
could struggle to win a runoff against a rival backed by the
business community.

Humala, a former army officer who has moderated his tone
since narrowly losing the 2006 race, leads by as much as 10
points over three more market-friendly candidates who are in a
tight race for second place, the latest polls show.

Vying for a spot in the June 5 runoff in one of the world’s
fastest-growing economies are former President Alejandro
Toledo, former Prime Minister Pedro Pablo Kuczynski and
lawmaker Keiko Fujimori, the daughter of imprisoned former
President Alberto Fujimori. Polls show her with a narrow grip
on second place. [ID:nPOLLSPE]

They have sought to dampen Humala’s chances by saying he
would step up state control over the economy, rolling back
reforms and jeopardizing some $40 billion of foreign investment
lined up for the next decade in mining and energy exploration.

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The candidates and their platforms [ID:N25238905]

Full campaign coverage [ID:nVOTEPE]

Key political risks to watch in Peru [ID:nRISKPE]

Chart of poll positions http://r.reuters.com/vyh88r

PDF report on the race http://r.reuters.com/qaq88r

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Those warnings have sought to frighten voters who are
enjoying relative wealth and stability after years of
hyperinflation and guerrilla wars during the 1980s and 1990s.

But Humala, 48, who led a short-lived military revolt in
2000, has surged in the race by shedding his hard-line image
and recasting himself as a soft-left leader in the vein of
former Brazilian President Luiz Inacio Lula da Silva.

He has promised “gradual change” to ensure the country’s
decade-long boom reaches the one-third of Peruvians who still
live in poverty.

“I’ve changed a lot. I’ve learned a lot in these years of
political life and we’ve had our finger on the country’s
pulse,” he said on Friday, dismissing criticism from rivals
that a vote for him was like “a leap into the abyss.”

Humala has taken to wearing ties, carrying rosary beads to
show he is a devout Roman Catholic and promising to be fiscally
prudent while respecting the independence of the central bank
and honoring the country’s many free-trade pacts.

A LULA, NO CHAVEZ

His softened tone has persuaded some on Wall Street and in
Peru’s vast mining sector that he has matured and is no longer
like his brother and father, two well-known Peruvian radicals.

Moody’s ratings agency said Peru’s investment-grade credit
rating would not be threatened by an eventual Humala victory.

Analysts see him as South America’s next Lula rather than a
leftist firebrand in the mold of Venezuelan President Hugo
Chavez, from whom Humala has sought to distance himself.

Still, Peru’s sol (PEN=PE: Quote, Profile, Research) currency and the country’s main
stock index (.IGRA: Quote, Profile, Research) have dipped over the past two weeks on
worries Humala could raise mining taxes, hike state subsidies
or tighten control of “strategic” sectors like electricity.

“Though he is now sending a more centrist message … the
market is not convinced and still perceives him as someone
quite likely to advance heterodox initiatives, in some cases
unwinding reforms that have served Peru well,” New York-based
investment bank UBS said in a report.

Some voters also doubt he has left his radical past
behind.

“I’d vote for anyone but Humala because I’m scared he wants
to make Peru like Venezuela,” said Rosario Aguayo, 58, an
administrator shopping in an affluent district of the capital,
Lima.

Voting starts at 8 a.m. (1300 GMT) from the Amazon forest
to the Andes, but no official results are expected for several
hours after polls close at 4 p.m. (2100 GMT).

Humala got 30 percent of the vote in the first round in
2006 before losing the runoff by 5 percentage points to
President Alan Garcia, who cannot run again.

This year’s second round could be just as tight.

Toledo, 65, the architect of Peru’s free-trade pact with
the United States, would be best-placed to beat Humala because
their families are both from the Andes and they compete for the
ethnic vote, although Toledo’s support extends across social
classes.

Kuczynski, 72, a former Wall Street banker who is known as
“El Gringo” because of his European parents, could have trouble
gaining traction outside of Lima, where he is strongly backed
by wealthy voters.

Fujimori, 35, is shunned by many voters because her father
is in prison for corruption and human rights crimes stemming
from his crackdown on insurgencies in the 1990s.

Both Humala and Fujimori have disapproval ratings of about
50 percent, the worst in the race, leading some to describe a
runoff between them as “the nightmare scenario.”

Peruvian Nobel literature laureate Mario Vargas Llosa, who
lost to the elder Fujimori in the 1990 presidential race, has
said a victory for either Humala or the younger Fujimori “would
truly be a catastrophe for Peru.”

“Touch wood, it won’t come to that,” the novelist said in a
recent interview with CNN.
(Additional reporting by Patricia Velez, Helen Popper, Marco
Aquino and Teresa Cespedes; Editing by Anthony Boadle)
([email protected]; +54 11 4318 0655; Reuters
Messaging: [email protected]))

Leftist may win Peru vote, but runoff likely