In a shift to the left in Peruvian politics, Ollanta Humala this week takes over from Alan García as the country's president. He was elected in a two-round contest earlier this year, beating the right-wing Keiko Fujimori, daughter of the country's disgraced former president Alberto Fujimori who is currently in jail for corruption and human rights crimes.

Humala has been a controversial figure. He first rose to prominence as the leader of a short-lived military rebellion in 2000 against the Fujimori government. In 2006, he surprised many analysts by winning more votes than any other candidate in the first round of the 2006 presidential elections, only to be then narrowly defeated by García in the second. On that occasion he posed as Hugo Chávez look-alike figure, not least because of his military background and his nationalistic rhetoric. He was eventually pipped at the post in the second round, with García rounding on him for supposedly having his campaign organised and financed from Caracas.

In this year's elections, Humala looked to Brazil's former president Lula, not Chávez, for inspiration. Strategists from Lula's party, the Workers' Party (PT), were actively involved in advising his campaign. Supported primarily by the poor and indigenous of Peru, Humala came from rank outsider once again to top the poll in the first round, displacing a number of centre-right candidates including former president Alejandro Toledo (2001-06). This time he proved more fortunate in the ballotage than in 2006. His narrow victory over Keiko Fujimori owed much to a willingness to sacrifice some of his more radical campaign promises to win over centrist opinion.

Humala's choice of cabinet - he made the final appointments at the weekend - also reflects the influence of Lula's experience. Like Lula, he has avoided upsetting the markets by appointing free-market technocrats as members of his economics team. Emphasizing continuity, he reappointed Garcia's central bank president and promoted García's former treasury vice-minister to the powerful position of minister of economy and finance. The new prime minister, Salomón Lerner, also comes from a business background.

However, his social policy team is left-of-centre. A key figure is likely to be Aida García Naranjo from the Socialist Party, the new social inclusion minister. Humala has promised a new deal for Peru's poor, whose interests were largely sidelined by Alan García in his enthusiasm for attracting foreign investment by whatever means possible. Humala will seek to protect peasant rights against the concessions given over to mining companies. He will also probably seek to build on the Juntos programme, a conditional cash transfer strategy introduced by Toledo and designed to improve health, education and welfare in poor neighbourhoods. The blueprint for Juntos was Brazil's Bolsa Familia programme, which is credited in substantially reducing poverty and inequality during Lula's eight years in office.

A key question, therefore, will be whether Peru will be able to emulate the Lula experience in Brazil. If Humala can pull it off, the political rewards may be high: Lula ended his period in government with 80% approval rates. He faces a number of challenges, though, and Peru is not Brazil.

Firstly, Brazil has a far higher tax base than Peru, where tax revenues only amount to around 15% of GDP. Humala has promised to raise taxation, especially on mining companies, but the economic elite in Peru is unaccustomed to paying the price for poverty relief. Secondly, Peru lacks a half-way efficient and honest system of public administration capable of administering a large-scale social welfare programme. Thirdly, unlike Brazil's Workers Party, Humala's Gana Perú party lacks any real presence in Peruvian society; he will be hard-pressed to rein in the often violent social protest movements that increasingly defied the Garcia government.

Much also will depend on the quality of leadership. Lula managed - eventually -- to win over the respect from friend and foe alike. Humala may well be able to do the same, but he has yet to convince Peru's wealthy and foreign investors of the need to make sacrifices in the interests of longer-term social stability.

Monterrico Metals: the Background Story

Earlier this month, British mining company Monterrico Metals reached an out-of-court settlement with 33 members of a peasant community in northern Peru who allege they were detained and tortured by police and mine security. The claimants had been protesting in 2005 against the Rio Blanco copper mine, owned by Monterrico Metals, when they were allegedly hooded, threatened and beaten over a period of three days. The protestors claimed the firm was complicit in their mistreatment. Though Monterrico continues to strenuously deny the claims, the settlement remains significant as the first time Peruvian peasant communities have successfully obtained compensation by initiating legal proceedings against an extractive firm abroad. UK-based campaigning organisation the Peru Support Group welcomed the settlement as "a significant achievement" but warned that "further tensions between local communities and the mine operator cannot be ruled out" when the Rio Blanco project resumes later this year.

John Crabtree is research associate at the Latin American Centre, Oxford. His latest book 'Fractured Politics: Peruvian Democracy Past and Present' has just been published by the Institute for the Study of the Americas, University of London.