LegiStorm

Summary:

This report provides an overview of Peru's political, economic, and security conditions and of U.S.-Peruvian relations. As President Ollanta Humala is nearing the end of his five-year term, Peru is preparing to hold national elections for the presidency and the 130-seat unicameral legislature on April 10, 2016. In several recent elections, Peruvians have elected a presidential candidate who surged from far behind in the polls in the final weeks of the campaign—as was the case with President Humala in 2011. The disqualification of two popular candidates, Julio Guzmán and Cesar Acuña, in March 2016 changed the landscape of the race and raised questions regarding the electoral institutions' neutrality and competency. For months, center-rightist Keiko Fujimori has maintained a strong lead in what began as a field of 18 candidates. Both the strong support for and opposition to Fujimori stem mostly from the legacy of her father, Alberto Fujimori, whose harsh security policy helped to squash the Sendero Luminoso terrorist group but also entailed gross violations of human rights. The elder Fujimori is serving a 25-year prison sentence in Peru for crimes against humanity and corruption. The removal of Guzmán and Acuña opened the space for center-right economist Pedro Pablo Kuczynski and leftist Verónika Mendoza to move up in polls to a technical tie for second place just a week before the vote. Keiko Fujimori is not expected to have enough votes to garner the 50% plus one needed to win outright, so the elections likely will proceed to a runoff between the top two contenders in June. The new president and congress are expected to assume office in July 2016. Since 2001, Peru's economy has been one of the strongest in Latin America. President Humala's economic strategy has been to maintain free-market policies while working to narrow the wide economic distribution gap and eliminate the social exclusion of Peru's poor, mostly indigenous population. Deep social divides over how to pursue this aim have continued to undercut political stability in Peru. Social unrest and debate over exploitation of natural resources has long been and will likely remain a major challenge for any Peruvian government. The more serious disputes have involved the mining industry and the rights of indigenous peoples in those areas where mining exists or where mining interests intend to operate. Humala has found it politically difficult to balance his stated desire to help the poor and indigenous with his effort to encourage investment by the business sector, especially the extractive industry. In addition, some observers project that the current El Niño weather pattern hitting Peru could hurt Peru's economic growth. Peru and the United States have a strong and cooperative relationship. Several issues in U.S.-Peruvian relations are likely to be considered in decisions by Congress and the Administration on future aid to and cooperation with Peru. The United States supports the strengthening of Peru's democratic institutions, counternarcotics efforts, security and respect for human rights, and environmental protection. A dominant theme in bilateral relations is the effort to stem the flow of illegal drugs, mostly cocaine, between the two countries. In the economic realm, the United States supports bilateral trade relations and Peru's further integration into the world economy. A bilateral free trade agreement (FTA) between the United States and Peru entered into force on February 1, 2009. In addition, both countries are parties to the Trans-Pacific Partnership (TPP) agreement, a proposed FTA with ten other countries.