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Peru - Tips

Wed, 7 Jul 2010 21:57:51

Peru Bureau of Western Hemisphere Affairs
July 2007

Background Note: Peru

Incan ruins at Machu Picchu, Peru,
July 2006. [© AP Images]

Flag of Peru is three equal, vertical bands of red on hoist side, white, and
red with the coat of arms centered in the white band.


Republic of Peru

Area: 1.28 million sq. km. (496,225 sq. mi.). Peru is the third-largest
country in South America and is approximately three times the size of
Cities: Lima (capital), Arequipa, Chiclayo, Cuzco, Huancayo, Ica, Trujillo,
Ayacucho, Piura, Iquitos, Chimbote.
Terrain: Western arid coastal plains, central rugged Andean mountains, and
eastern lowlands with tropical forests that are part of the Amazon basin.
Climate: Arid and mild in coastal area, temperate to frigid in the Andes, and
warm and humid in the jungle lowlands.

Nationality: Peruvian.
Ethnic groups: Indigenous (45%), mixed background ("mestizo") (37%), European
(15%), African, Japanese, Chinese, and other (3%).
Population (July 2007 est.): 28.6 million. Approximately 30% of the
population lives in the Lima/Callao metropolitan area.
Annual population growth rate (2007 est.): 1.28%.
Religions: Roman Catholic (81%), other (10%).
Languages: Spanish is the principal language. Quechua, Aymara and other
indigenous languages also have official status.
Education: Years compulsory--11. Attendance--92% ages 6-11, and 66% ages
12-16. Literacy--95% in urban areas, 77% in rural areas.
Health: Infant mortality rate (2006)--29.96/1,000. Life expectancy (2007)
--68.33 years male; 72.04 years female.
Unemployment in Lima (2006): 8.5%; underemployment (2006): 49.5%.

Type: Constitutional republic.
Independence: July 28, 1821.
Constitution: December 31, 1993.
Branches: Executive--President, two Vice Presidents, and a Council of
Ministers led by a Prime Minister. Legislative--Unicameral Congress.
Judicial--Four-tier court structure consisting of Supreme Court and lower
Administrative divisions: 25 departments subdivided into 180 provinces and
1,747 districts.
Political parties: Alianza Popular Revolucionaria Americana (APRA), National
Unity (UN), Peru Posible (PP), Popular Action (AP), Union for Peru (UPP),
Solucion Popular, Somos Peru (SP).
Suffrage: Universal and mandatory for citizens 18 to 70.

GDP (2006): $93.3 billion.
Annual growth rate (2006): 8.0%.
Per capita GDP (2006): $3,368.
Natural resources: Iron ore, copper, gold, silver, zinc, lead, fish,
petroleum, natural gas, and forestry.
Manufacturing (16.7% of GDP, 2006): Types--Food and beverages, textiles and
apparel, nonferrous and precious metals, nonmetallic minerals, petroleum
refining, paper, chemicals, iron and steel, fishmeal.
Agriculture (9.2% of GDP, 2006): Products--Coffee, asparagus, paprika,
artichoke, sugarcane, potato, rice, banana, maize, poultry, milk, others.
Other sectors (by percentage of GDP in 2006): Services (44.9%), mining
(6.8%), construction (5.8%), fisheries (0.6%).
Trade: Exports (2006)--$23.7 billion: gold, copper, fishmeal, petroleum,
zinc, textiles, apparel, asparagus and coffee. Major markets (2005)--U.S.
(30%), China (11%), Chile (6.6%), Canada (6.0%), Switzerland (4.6%), Japan
(3.6%), Spain (3.3%), Netherlands (3.1%). Imports (2005)--$14.9 billion:
machinery, vehicles, processed food, petroleum and steel. Major suppliers
(2005)--U.S. (17.7%), China (8.5%), Brazil (8.2%), Ecuador (7.3%), Colombia

Peru is the fifth most populous country in Latin America (after Brazil,
Mexico, Colombia and Argentina). Twenty-one cities have a population of
100,000 or more. Rural migration has increased the urban population from
35.4% of the total population in 1940 to an estimated 74.6% as of 2005.

Most Peruvians are either Spanish-speaking mestizos--a term that usually
refers to a mixture of indigenous and European/Caucasian--or Amerindians,
largely Quechua-speaking indigenous people. Peruvians of European descent
make up about 15% of the population. There also are small numbers of persons
of African, Japanese, and Chinese ancestry. Socioeconomic and cultural
indicators are increasingly important as identifiers. For example, Peruvians
of Amerindian descent who have adopted aspects of Hispanic culture also are
considered mestizo. With economic development, access to education,
intermarriage, and large-scale migration from rural to urban areas, a more
homogeneous national culture is developing, mainly along the relatively more
prosperous coast. Peru's distinct geographical regions are mirrored in a
socioeconomic divide between the coast's mestizo-Hispanic culture and the
more diverse, traditional Andean cultures of the mountains and highlands.


The Inca Empire and Spanish Conquest
When the Spanish landed in 1531, Peru's territory was the nucleus of the
highly developed Inca civilization. Centered at Cuzco, the Incan Empire
extended over a vast region from northern Ecuador to central Chile. In search
of Inca wealth, the Spanish conqueror Francisco Pizarro, who arrived in the
territory after the Incas had fought a debilitating civil war, conquered the
weakened people. The Spanish captured the Incan capital at Cuzco by 1533, and
consolidated their control by 1542. Gold and silver from the Andes enriched
the conquerors, and Peru became the principal source of Spanish wealth and
power in South America.

Pizarro founded Lima in 1535. The viceroyalty established at Lima in 1542
initially had jurisdiction over all of the Spanish colonies in South America.
By the time of the wars of independence (1820-24), Lima had become one of the
most distinguished and aristocratic colonial capital and the chief Spanish
stronghold in the Americas.

Peru's independence movement was led by Jose de San Martin of Argentina and
Simon Bolivar of Venezuela. San Martin proclaimed Peruvian independence from
Spain on July 28, 1821. Emancipation was completed in December 1824, when
Venezuelan General Antonio Jose de Sucre defeated the Spanish troops at
Ayacucho, ending Spanish rule in South America. Spain subsequently made
futile attempts to regain its former colonies, but in 1879 it finally
recognized Peru's independence.

After independence, Peru and its neighbors engaged in intermittent
territorial disputes. Chile's victory over Peru and Bolivia in the War of the
Pacific (1879-83) resulted in a territorial settlement in which Peru ceded
the department of Tarapaca and the provinces of Tacna and Arica to Chile. In
1929, Chile returned Tacna to Peru. Following a clash between Peru and
Ecuador in 1941, the Rio Protocol--of which the United States is one of four
guarantors (along with Argentina, Brazil and Chile)--sought to establish the
boundary between the two countries. Continuing boundary disagreement led to
brief armed conflicts in early 1981 and early 1995, but in 1998 the
governments of Peru and Ecuador signed an historic peace treaty and
demarcated the border. In late 1999, the governments of Peru and Chile
likewise implemented the last outstanding article of their 1929 border
agreement. Peru and Chile still dispute the sea boundary.

Contemporary History

Military Rule and Return to Democracy (1968-1980)
The military has been prominent in Peruvian history. Coups have repeatedly
interrupted civilian constitutional government. The most recent period of
military rule (1968-80) began when Gen. Juan Velasco Alvarado overthrew
elected President Fernando Belaunde Terry of the Popular Action Party (AP).
As part of what has been called the "first phase" of the military
government's nationalist program, Velasco undertook an extensive agrarian
reform program and nationalized the fishmeal industry, some petroleum and
mining companies, and several banks.

Because of Velasco's economic mismanagement and deteriorating health, he was
replaced in 1975 by Gen. Francisco Morales Bermudez. Morales Bermudez
tempered the authoritarian abuses of the Velasco administration and began the
task of restoring the country's economy. Morales Bermudez presided over the
return to civilian government under a new constitution and in the May 1980
elections, President Belaunde Terry was returned to office by an impressive

Instability in the 1980s (1982-1990)
Nagging economic problems left over from the military government persisted,
worsened by an occurrence of the "El Niño" weather phenomenon in 1982-83,
which caused widespread flooding in some parts of the country, severe
droughts in others, and decimated the fishing industry. The fall in
international commodity prices to their lowest levels since the Great
Depression combined with the natural disasters to decrease production,
depress wages, exacerbate unemployment, and spur inflation. The economic
collapse was reflected in worsening living conditions for Peru's poor and
provided a breeding ground for social and political discontent. The emergence
of the terrorist group Sendero Luminoso (Shining Path) in rural areas in
1980--followed shortly thereafter by the Tupac Amaru Revolutionary Movement
(MRTA) in Lima--sent the country further into chaos. The terrorists were
financed in part from alliances with narcotraffickers, who had established a
stronghold in the Peruvian Andes during this period. Peru and Bolivia became
the largest coca producers in the world, accounting for roughly four-fifths
of the production in South America.

Amid inflation, economic hardship, and terrorism, the American Popular
Revolutionary Alliance (APRA) won the presidential election in 1985, bringing
Alan García Pérez to office. The transfer of the presidency from Belaunde to
García on July 28, 1985, was Peru's first transfer of power from one
democratically elected leader to another in 40 years.

The Fujimori Decade (1990-2000)
Economic mismanagement by the García administration led to hyperinflation
from 1988 to 1990. Concerned about the economy, the increasing terrorist
threat from Sendero Luminoso, and allegations of official corruption, voters
chose a relatively unknown mathematician-turned-politician, Alberto Fujimori,
as president in 1990. Fujimori felt he had a mandate for radical change. He
immediately implemented drastic economic reforms to tackle inflation (which
dropped from 7,650% in 1990 to 139% in 1991), but found opposition to further
drastic measures, including dealing with the growing insurgency. On April 4,
1992, Fujimori dissolved the Congress in the "auto-coup," revised the
constitution, and called new congressional elections. With a more pliant
Congress, Fujimori proceeded to govern unimpeded. Large segments of the
judiciary, the military and the media were co-opted by Fujimori's security
advisor, the shadowy Vladimiro Montesinos. The government unleashed a
counterattack against the insurgency that resulted in countless human right
abuses and eventually quashed the Shining Path and MRTA. During this time he
also privatized state-owned companies, removed investment barriers and
significantly improved public finances.

Fujimori's constitutionally questionable decision to seek a third term, and
subsequent tainted electoral victory in June 2000, brought political and
economic turmoil. A bribery scandal that broke just weeks after he began his
third term in July forced Fujimori to call new elections in which he would
not run. Fujimori fled the country and resigned from office in November 2000.
A caretaker government under Valentin Paniagua presided over new presidential
and congressional elections in April 2001. The new elected government, led by
President Alejandro Toledo, took office July 28, 2001.

The Toledo Administration (2001-2006)
The Toledo government successfully consolidated Peru's return to democracy, a
process that had begun under President Paniagua. The government undertook
initiatives to implement the recommendations made by the Truth and
Reconciliation Commission (TRC), which had been charged with studying the
circumstances surrounding the human rights abuses and violations committed
between 1980 and 2000. Criminal charges for corruption and human rights
violations were brought against former President Fujimori, who is in Chile
fighting efforts to extradite him to Peru. Despite being a frequent target of
media criticism, Toledo maintained strong commitments to freedom of the

Under President Toledo, Peru signed a Trade Promotion Agreement (TPA) with
the U.S., to replace the Andean Trade Preferences and Drug Eradication Act,
which was due to expire in December 2006. Toledo also unveiled the
construction of a road that will connect Brazil and Peru's isolated interior
to the Pacific coast.

Toledo's economic management led to an impressive economic boom in Peru that
remains strong. Poverty reduction has been uneven, however. Although poverty
in some areas has decreased by up to 37% over the last five years, nationally
it has only decreased by 5% and over half of Peruvians are still considered
to be living below the poverty line (living on less than $2 a day). In 2005
the government implemented "Juntos," a program to double the income of people
living under extreme poverty (less than $1 a day).

2006 Elections and Transition to the Garcia Administration
On June 4, 2006, APRA candidate Alan García Pérez was elected to the
presidency by 52.5% of the voters in his runoff with Ollanta Humala, who ran
under the Union for Peru, with the support of his Peruvian Nationalist Party.
With 36 seats, APRA has the second largest bloc--next to the Union for Peru
Party's 45 seats--in the 120-seat unicameral Congress which was sworn in July
2006. After a disappointing presidential term from 1985 to 1990, García
returned to the presidency with promises to improve Peru's social condition,
balancing economic stability with increased social spending. His stated
primary goal is to decrease poverty through job creation, especially in
Peru's southern highlands where poverty is most acute. He has sought to
improve relations with Peru's South American neighbors and with the United
States, and to present Peru's democratic and pro-free trade path as a model
for the region.

Constitution and Political Institutions
The president is popularly elected for a five year term. A constitutional
amendment passed in 2000 prevents reelection. The first and second vice
presidents also are popularly elected but have no constitutional functions
unless the president is unable to discharge his duties. The principal
executive body is the Council of Ministers, comprised of 15 members and
headed by a prime minister. The president appoints its members, who must be
ratified by the Congress. All Executive laws sent to Congress must be
approved by the Council of Ministers.

The legislative branch consists of a unicameral Congress of 120 members. In
addition to passing laws, Congress ratifies treaties, authorizes government
loans, and approves the government budget.

The judicial branch of government is headed by a 16-member Supreme Court. The
Constitutional Tribunal interprets the constitution on matters of individual
rights. Superior courts in departmental capitals review appeals from
decisions by lower courts. Courts of first instance are located in provincial
capitals and are divided into civil, penal, and special chambers. The
judiciary has created several temporary specialized courts in an attempt to
reduce the large backlog of cases pending final court action. In 1996 a human
rights ombudsman's office was created.

Peru is divided into 25 regions. The regions are subdivided into provinces,
which are composed of districts. High authorities in the regional and local
levels are elected. The country's latest decentralization program is in
hiatus after the proposal to merge departments was defeated in a national
referendum in October 2005.

Principal Government Officials
President--Alan GARCIA Pérez
First Vice President--Luis GIAMPIETRI Rojas
Second Vice President--Lourdes MENDOZA del Solar
President of the Council of Ministers (Prime Minister)--Jorge DEL CASTILLO
Foreign Affairs Minister--José GARCÍA BELAÚNDE Antonio
Finance and Economy Minister--Luis CARRANZA Ugarte
Defense Minister--Allan WAGNER Tizón
Minister of Economy and Finance--Luis CARRANZA Ugarte
Minister of Interior--Luis ALVA Castro
Minister of Justice--María ZAVALA Valladares
Minister of Educacion--José Antonio CHANG Escobedo
Minister of Health--Carlos VALLEJOS Sologuren
Minister of Agriculture--Ismael BENAVIDES Ferreyros
Minister of Labor--Susana PINILLA
Minister of Trade and Tourism--Mercedes ARAOZ Fernández
Minister of Energy and Mines--Juan VALDIVIA Romero
Minister of Transportation and Communications--Verónica ZAVALA Lombardi
Minister of Production--Ingeniero Rafael REY Rey
Minister of Housing--Hernán GARRIDO Lecca
Minister of Women--Virginia BORRA
Ambassador to the United States--Felipe Ortiz de Zevallos
Permanent Representative to the United Nations--Oswaldo DE RIVERO
Ambassador to the Organization of American States--Antero FLORES-ARAOZ

Peru maintains an embassy in the United States at 1700 Massachusetts Avenue,
NW, Washington, DC 20036 (tel. (202) 833-9860/67, consular section: (202)
462-1084). Peru has consulates in Atlanta, New York, Paterson (NJ), Miami,
Chicago, Houston, Denver, Los Angeles, San Francisco, Boston, and Hartford.

Peru's economy has shown strong growth over the past five years, helped by
market-oriented economic reforms and privatizations in the 1990s, and
measures taken since 2001 to promote trade and attract investment. GDP grew
8.0% in 2006, 6.7% in 2005, 4.8% in 2004, 4.0 in 2003, and 4.9% in 2002.
President Alan Garcia and his economic team have continued these policies.
GDP is projected to grow by more than 7% in 2007. Recent economic expansion
has been driven by construction, mining, export growth, investment, and
domestic demand. Inflation is projected to remain under 2% in 2007, and the
fiscal deficit is only 0.6% of GDP. In 2006 external debt decreased to $28.3
billion, and foreign reserves were a record $17.3 billion at the end of 2006.

Peru's economy is well managed, and better tax collection and growth are
increasing revenues, with expenditures keeping pace. Private investment is
rising and becoming more broad-based. The government has had success with
recent international bond issuances, resulting in ratings upgrades. The
Garcia administration is studying decentralization initiatives, and is
focused on bringing more small businesses into the formal economy.

Foreign Trade
Peru and the U.S. signed the U.S.-Peru Trade Promotion Agreement (PTPA) on
April 12, 2006 in Washington, DC. The PTPA was ratified by the Peruvian
Congress on June 28, 2006, but has not yet been ratified by the U.S.
Congress. On December 9, 2006, the U.S. Congress extended the Andean Trade
Preference Act (ATPA) as amended by the Andean Trade Promotion and Drug
Eradication Act (ATPDEA)--jointly referred to as ATPA/ATPDEA--through June
2007. On June 30, 2007 the President signed legislation extending ATPA/ATPDEA
for an additional 8 months.

Peru registered a trade surplus of $8.8 billion in 2006. Exports reached
$23.7 billion, partially as a result of high mineral prices. Peru's major
trading partners are the U.S., China, EU, Chile and Japan. In 2006, 23.0% of
exports went to the U.S. ($5.9 billion) and 16.0% of imports came from the
U.S. ($2.9 billion). Exports include gold, copper, fishmeal, petroleum, zinc,
textiles, apparel, asparagus and coffee. Imports include machinery, vehicles,
processed food, petroleum and steel. Peru belongs to the Andean Community,
the Asia-Pacific Economic Cooperation (APEC) forum, and the World Trade
Organization (WTO).

Foreign Investment
The Peruvian Government actively seeks to attract both foreign and domestic
investment in all sectors of the economy. The registered stock of foreign
direct investment (FDI) is over $15.4 billion, with the U.S., Spain, and the
United Kingdom the leading investors. FDI is concentrated in
telecommunications, mining, manufacturing, finance and electricity.

Mining and Energy
Peru is a source of both natural gas and petroleum. In August 2004, Peru
inaugurated operations of the Camisea natural gas project. Camisea gas is
fueling an electricity generator and six industrial plans in Lima, with other
facilities in the process of switching to gas. In a second phase, liquefied
natural gas (LNG) will be exported to the west coast of the United States and
Mexico. The gas and condensates from Camisea are equivalent to some 2.4
billion barrels of oil, approximately seven times the size of Peru's proven
oil reserves. The Camisea project, when completed, is expected to gradually
transform Peru's economy, catalyze national development and turn Peru into a
net energy exporter.

Peru is the world's second-largest producer of silver, sixth-largest producer
of gold and copper, and a significant source of the world's zinc and lead.
Mineral exports have consistently accounted for the most significant portion
of Peru's export revenue, averaging around 50% of total earnings from 1998 to
2005 and 62% in 2006.

Peru generally enjoys friendly relations with its neighbors.

In November 1999, Peru and Chile signed three agreements that put to rest the
remaining obstacles holding up implementation of the 1929 Border Treaty. (The
1929 Border Treaty officially ended the 1879 War of the Pacific.) In late
2005, a declaration of maritime borders by Peru's Congress set off a new
round of recriminations with Chile, which claims that the maritime borders
were agreed to in fishing pacts dating from the early 1950s. In contrast, the
Garcia administration has recently made overtures to Chile, aimed at
improving that relationship.

In October 1998, Peru and Ecuador signed a peace accord to resolve once and
for all border differences that had sparked violent confrontations. Peru and
Ecuador are now jointly coordinating an internationally sponsored border
integration project. The U.S. Government, as one of four guarantor states,
was actively involved in facilitating the 1998 peace accord between Peru and
Ecuador and remains committed to its implementation. The United States has
pledged $40 million to the Peru-Ecuador border integration project and
another $4 million to support Peruvian and Ecuadorian demining efforts along
their common border.

In 1998, Peru became a member of the Asia-Pacific Economic Cooperation (APEC)
forum, facilitating closer ties and economic relations between Peru and Asian
nations. Peru will host the APEC Summit in 2008.

Peru has been a member of the United Nations since 1949, and is a member of
the Security Council. Peruvian Javier Perez de Cuellar served as UN Secretary
General from 1981 to 1991.

Peru maintains 210 troops in peacekeeping operations in Haiti under the UN's

The United States enjoys strong and cooperative relations with Peru.
Relations were strained following the tainted re-election of former President
Fujimori in June 2000, but improved with the installation of an interim
government in November 2000 and the inauguration of the government of
Alejandro Toledo in July 2001. Relations with President Garcia's
administration are positive. The United States continues to promote the
strengthening of democratic institutions and human rights safeguards in Peru
and the integration of Peru into the world economy.

The United States and Peru cooperate on efforts to interdict the flow of
narcotics, particularly cocaine, to the United States. Bilateral programs are
now in effect to reduce the flow of drugs through Peru's port systems and to
perform ground interdiction in tandem with successful law enforcement
operations. These U.S. Government-supported law enforcement efforts are
complemented by an aggressive effort to establish an alternative development
program for coca farmers in key coca growing areas to voluntarily reduce and
eliminate coca cultivation. This effort is funded by the Department of
State's Bureau of International Narcotics and Law Enforcement Affairs (INL)
and the U.S. Agency for International Development (USAID).

U.S. investment and tourism in Peru have grown substantially in recent years.
The U.S. is Peru's number one trade partner, and economic and commercial ties
will deepen if the U.S.-Peru Trade Promotion Agreement (PTPA) is passed by
the U.S. Congress.

About 200,000 U.S. citizens visit Peru annually for business, tourism, and
study. About 16,000 Americans reside in Peru, and more than 400 U.S.
companies are represented in the country.

Principal U.S. Embassy Officials
Ambassador--J. Curtis Struble
Deputy Chief of Mission--Phyllis Powers
Director, USAID Mission--Paul Weisenfeld
Counselor for Political Affairs--Alexis Ludwig
Counselor for Economic Affairs--Adam Shub
Counselor for Narcotics Affairs (NAS)--Susan Keogh
Counselor for Public Affairs--Sam Wunder
Counselor for Management Affairs--Robert Davis
Counselor for Consular Affairs--Ray Baca
Commercial Counselor--Margaret Hanson-Muse
Naval and Defense Attaché--Capt. Lee Rivas
Army Attaché--Col. Kris Cuello
Chief, Military Assistance Advisory Group (MAAG)--Col. Jeffrey Fargo
Consular Agent, Cuzco--Olga Villagarcia

The U.S. Embassy in Peru is located at Avenida Encalada, Cuadra 17 s/n,
Monterrico (Surco), Lima 33 (tel. (511) 434-3000; fax. (511) 434-3037. Home
page: http://lima.usembassy.gov/

The embassy is open from 8:00 a.m. to 5:00 p.m., Monday-Friday, except U.S.
and some Peruvian holidays. The mailing address from the United States is
American Embassy Lima, APO AA 34031 (use U.S. domestic postage rates). The
American Citizen Services section is open to the public from 8:00 a.m. to 12:
00 p.m.

The Consular Agency in Cuzco is located at Anda Tullamayu 125 (tel. (51) (84)
224112 or (51) (84) 239451; fax. (51) (84) 233541). The USAID Building is
located at Av. Encalada cdra. 17 s/n, Monterrico (Surco) Lima 33, (tel. (511)

Other Contact Information
U.S. Department of State
Bureau of Western Hemisphere Affairs
Office of Andean Affairs (Room 5906)
2201 C Street NW
Washington, DC 20520-6263
Tel: 202-647-4177
Fax: 202-647-2628
Home Page: http://www.state.gov/

U.S. Department of Commerce
International Trade Administration
Office of Latin America and the Caribbean
14th and Constitution, NW
Washington, DC 20230
Tel: (202) 482-0475
Fax: (202) 482-0464
Home Page: http://trade.gov/

American Chamber of Commerce of Peru
Avenida Ricardo Palma 836, Miraflores
Lima 18, Peru
Tel: (511) 241-0708
Fax: (511) 241-0709
E-Mail: [email protected]
Home Page: http://www.amcham.org.pe/

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