Peru’s Congress removed President Dina Boluarte early Friday morning with 121 votes, citing “permanent moral incapacity” to address organized crime. This marks Peru’s third president since 2022. The same Congress that removed Pedro Castillo has now removed his successor.

As someone who has facilitated thousands of cross-border transactions across Latin America and currently serves on corporate boards in frontier markets, I can tell you what American investors need to understand: this isn’t about one president’s failure. This is about institutional breakdown patterns that make long-term capital deployment extraordinarily difficult.

The Due Process Problem

Congress filed impeachment motions Thursday afternoon and held the removal vote around midnight Friday morning. Boluarte’s legal team refused to participate, stating Congress violated due process by not providing adequate time to prepare a defense. Regardless of her performance record, removing a head of state in under 24 hours should concern anyone who values constitutional order and predictable governance.

The Real Story: Organized Crime as Political Force

The stated reason for removal was Boluarte’s inability to combat organized crime and insecurity. To understand why this matters, you need to understand what’s actually happening in Lima.

Homicides in Peru increased 137% between 2018 and 2024, with preliminary 2025 data showing 562 homicides in just the first three months. That is a 20% increase over the same period in 2024. More than half of 2024’s homicides were contract killings carried out by hitmen, indicating organized crime involvement.

But the numbers don’t capture the lived reality. Over 75% of Peruvians report being scared when leaving their homes, and one in three Peruvians personally knows an extortion victim. At least 1,000 schools in Lima are being extorted by criminal gangs, with demands ranging from $14,000 to $28,000 per school. Extortion now targets corner stores, street food vendors, and even soup kitchens in Lima’s poorest neighborhoods. One small business owner was asked to pay $280 weekly which is roughly one month’s income. When she refused, gangsters decapitated her three cats and hung their heads outside her store.

Extortion complaints increased sixfold between 2021 and 2023, particularly affecting urban areas and cargo transport. This isn’t peripheral criminality. It’s systematic economic predation that makes normal business operations nearly impossible in large sections of the capital.

The institutional response has made things worse. By 2024, 67 of 130 Congress members (a simple majority) were under criminal investigation. When prosecutors charged Congress members with being part of criminal organizations, Congress passed a law narrowing the definition of “organized crime,” hindering investigations into corruption and extortion. Boluarte signed it into law.

Congress has sharply limited prosecutors’ ability to obtain evidence from cooperating defendants, a significant blow to efforts to dismantle criminal groups and detect connections to corrupt officials. Lawmakers have arbitrarily removed high-level judges and prosecutors, often blocking corruption investigations.

Boluarte declared multiple states of emergency, suspending constitutional rights to allow arrests without judicial orders. These measures have not led to a reduction in violence. When the government declared a state of emergency in Lima on March 18, it did little to help. Corrupt police officers tip off gangs about pending raids in exchange for bribes, undermining even aggressive enforcement efforts.

Here’s what matters for Western businesses: when criminal organizations reach the level where they can effectively influence who governs and a majority of legislators are under criminal investigation themselves, you’re not just managing business risk, you’re operating in a contested governance environment. The security crisis didn’t start with Boluarte and won’t end with her departure. The institutions that should fight organized crime are compromised by it.

I recently worked with a client evaluating a significant investment in a region of Peru experiencing exactly these dynamics. Through on-the-ground due diligence, we identified active extortion networks that would have made operations untenable. The project was restructured to avoid unnecessary risk exposure. You can read the full case study here.

Why This Matters for Foreign Investment

Peru demonstrates a critical frontier market dynamic: constitutional mechanisms can be technically legal while revealing dangerous institutional fragility. Congress can remove presidents for “moral incapacity” with no objective standard. It is a vague constitutional provision that becomes a weapon when legislative and executive branches are in conflict.

This creates a predictable pattern: any president facing security crises (which every Latin American leader currently faces) can be removed by a hostile Congress. That’s not democratic accountability; that’s legislative supremacy without checks.

Why This Matters to America

Peru isn’t a distant problem Americans can ignore. It’s a critical strategic partner sitting on massive copper, gold, and lithium deposits essential for America’s energy transition and technology sector. Peru is the world’s second-largest copper producer and holds significant rare earth reserves that American manufacturers desperately need as we reduce dependence on Chinese supply chains.

More importantly, Peru represents a governance pattern spreading across Latin America: organized crime groups sophisticated enough to destabilize governments, congressional bodies weaponizing vague constitutional provisions, and security crises that make institutional reform nearly impossible. When this dynamic takes hold, it doesn’t stay contained within borders. Migration pressures increase, trade relationships become unreliable, and competitors, particularly China, step in to offer stability deals that come with strings attached.

American foreign policy has historically focused on whether Latin American governments are democratic or authoritarian. The real question now is whether they’re governable at all. Peru’s revolving-door presidency suggests we’re watching institutional collapse in slow motion in a country that should be a stable regional partner.

What This Means for American Investment

The immediate impact is straightforward: any American company with operations or contracts in Peru just saw their political risk premium increase. Contracts signed under Boluarte’s administration are now subject to review by a new executive who may have different priorities and different political debts to pay.

But the deeper concern is strategic. American companies are desperately trying to diversify supply chains away from China for critical minerals. Peru was supposed to be part of that solution. Five presidents in five years makes long-term resource development partnerships nearly impossible to structure. Mining projects require 10-15 year time horizons. Infrastructure investments need stable regulatory environments. Technology partnerships depend on consistent intellectual property enforcement.

When executive branches can’t complete terms, American businesses face an impossible choice: accept elevated risk premiums that make projects uneconomical, or cede these strategic resources to competitors who are willing to accept the instability because they’re playing a different game with longer time horizons and state-backed capital.

The Chinese model in particular thrives in exactly this environment. They offer infrastructure packages that don’t require stable democratic institutions, just reliable access to resources. Every time a country like Peru demonstrates it can’t maintain governmental continuity, it makes the Chinese offer more attractive relative to partnerships that require institutional stability.

For American investors and policymakers, Peru is a test case: can we compete for strategic resources in frontier markets where organized crime and institutional fragility are the baseline, or do we need stable democracies that increasingly don’t exist in resource-rich regions? The answer to that question will determine whether America’s supply chain diversification strategy is realistic or aspirational.

The Bottom Line

This is why understanding informal power structures matters more than reading constitutions when evaluating frontier market opportunities. The legal mechanism used to remove Boluarte was constitutional. The underlying dynamic, organized crime influencing governance stability combined with a Congress willing to use removal powers liberally, is the actual risk that needs to be priced into every Peru-related investment decision.

Western investors and companies need advisors who understand these patterns and can help navigate them. Because the next president will face the same Congress, the same security challenges, and likely the same outcome unless something fundamental changes in Peru’s institutional architecture.