Peru: Current Conditions and U.S. Relations (CRS Report for Congress)
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| Release Date |
July 21, 2009 |
| Report Number |
R40716 |
| Report Type |
Report |
| Authors |
Maureen Taft-Morales, Specialist in Latin American Affairs |
| Source Agency |
Congressional Research Service |
Summary:
Peru shows promising signs of economic and political stability and the inclination to work with the United States on mutual concerns. President Alan GarcÃa is, however facing challenging times during this, the third year of his five-year term. Widespread social unrest has increased as growing inflation combines with unmet expectations that social conditions for Peru's poorest citizens would improve with Peru's economic growth. Peru's economy has been stronger than virtually all other Latin American economies since 2001. Peru's poverty rates have been dropping since 2000, but still remain high considering Peru's income levels. Economic power is, and has been traditionally, concentrated in the hands of a small economic elite of European descent. The subsistence sector, on the other hand, is concentrated in the mountainous interior, and among the mostly indigenous population there. Indeed, the percentage of the population living in poverty in cities in 2007 was about 26%, while the percentage living in poverty in rural areas was about 65%.
On June 5, 2009, unrest exploded into a deadly conflict when the government sent police to break up blockades set up by thousands of indigenous protesters in the Amazon. The deadly clash between the indigenous protesters and police, and the reaction to it, is indicative of the polarization both within Peru and within the Andean region. The protest stemmed from disputes over who has the right to exploit natural resources in the Amazon and elsewhere in the country. The fallout from the protests has also heightened regional tensions over how to reduce poverty and the nature of foreign relations.
While Peru's sound public finances can help offset damage from the global financial crisis, its institutional weaknesses may limit the effectiveness of economic stimulus measures and the Peruvian government's ability to carry out poverty reduction programs. As the world economic downturn leads to a dramatic slowing of Peru's economic growth, this weak institutional capacity may also hinder the government's ability to implement responsive economic policies effectively. The GarcÃa Administration's ability to govern may continue to be challenged by ongoing political unrest.
The violent guerrilla movement Sendero Luminoso, or Shining Path, which helped drive Peru to the brink of collapse during GarcÃa's first presidency (1985-1990), has reemerged in recent years, now linked to drug-trafficking.
On a more positive note, in a landmark legal case, on April 7, 2009, former President Fujimori was convicted and sentenced to 25 years in prison for "crimes against humanity," on charges of corruption and human rights abuses. Analysts regard the court's decision as a considerable accomplishment for Peru's judicial system, which has been considered weak and subject to political influence.
Peru and the United States have a strong and cooperative relationship. The United States supports the strengthening of Peru's democratic institutions and respect for human rights. A U.S.-Peru Trade Promotion Agreement (PTPA) went into effect on February 1, 2009. The two countries also cooperate on counter-narcotics efforts, maritime concerns, combating human trafficking, and improving disaster preparedness.
