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COUNTRY PROFILES


PROFILE

Country facts

Full country name: Republic of Peru
Area: 1,285,220 sq km (496,225 sq miles)
Population: 29.46 million (2010 estimate)
Capital city: Lima (population: 9.11 million in metropolitan area, 2010 estimate)
People: Amerindian (45%), Mestizo (37%), European/White (15%), African, Japanese, Chinese, and other 3%
Language(s): Spanish (official), Quechua (official), Aymara, Ashaninka and a number of other native (primarily Amazonian) languages
Religion(s): Roman Catholic (81.3%), Evangelical 12.5%, other 3.3% unspecified or none 2.9% (2007 census)
Currency: Nuevo Sol
Political parties and alliances: Partido Aprista Peruano (APRA), Alianza por el Gran Cambio, Peru Posible (PP), Partido Nacionalista Peruano (PNP), Fuerza 2011, Partido Solidaridad Nacional, Partido Popular Cristiano (PPC), Fuerza Social
Government: Constitutional Republic. The 1993 constitution, approved by referendum, provides for an executive for 5 years. The principal executive body is the Council of Ministers, headed by the Prime Minister, appointed by the President. A unicameral 120-member Congress is elected at the same time as the President and also sits for 5 years. It is the main legislative branch of government with the President holding a veto. An 18 member Supreme Court based in Lima heads the judicial branch.
Head of State: President Ollanta Humala Tasso(Gana Peru) since 28 July 2011.
Prime Minister: Solomon Lerner Ghitis
Foreign Minister: Rafael Roncagliolo
Membership of international groupings/organisations: Peru holds membership of the UN and various UN organisations; WTO; G-15; G24; G77; Organisation of American States (OAS); Asia Pacific Economic Community (APEC); Andean Community (CAN); Rio Group; Union of South American Nations (UNASUR), Inter-American Developmental Bank (IADB); IMF.

Did You Know?

-- Paddington Bear is from 'deepest, darkest Peru'.

-- Rediscovered in 1911, the Inca city of Machu Picchu celebrates 100 years since its rediscovery by Hiram Bingham. More than 67,000 British tourists visited Peru last year.

-- Peru is one of the most bio-diverse countries in the world, containing 83 of a possible 103 types of ecological zones. The world's largest rain forest, the Amazon jungle covers half of Peru's total landmass.

-- Peru is one of the world's richest countries in terms of natural resources. Gold, silver, copper, zinc, lead, iron and reserves of natural gas and oil can be found across the country.

-- The remains of the largest adobe city in the world are located at Chan Chan in northern Peru.

-- The area around Nasca, famous for its geometric lines, is also home to the highest sand dune in the world (2,078m).

-- The Colca Canyon in southern Peru is twice as deep as the Grand Canyon.

-- Peru is home to part of the highest navigable lake in the world. Lake Titicaca.

-- Peru produces some of the world's finest chocolate and coffee, and is fast becoming a gastronomic tourist destination.

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ECONOMY

Basic Economic Facts

GDP: US$130.3bn (2009) (World Bank)
GDP per head: US$ 4,200 (2009) (World Bank)
Annual growth: 9% (2010) (BCR Central Bank)
Inflation: 2.08% (2009) (BCR Central Bank)
Unemployment: 7.6% (2009) (INE, Peru office of Statistics)
Major industries: Mining, hydrocarbons, fishing, textiles, food processing, agriculture, financial services and tourism.
Major trading partners: United States, Latin American countries, European Union and Asia.

The Peruvian economy has enjoyed continued growth and isamong the top performers in Latin America, with an average GDP growth of 6% between 2001 and 2010. GDP growth jumped to almost 9% in 2010, largely due to increased investment in mining, increases in commodity prices and a booming construction sector. Growth is forecast to be around 4.2% in 2011. Inflation dropped to 2.08% in 2010, a slight increase from 2.0% in 2009.

The currency composition of government debt has improved markedly in recent years. Moody's Investors Service has recently revised its outlook on Peru's Baa3 foreign-and local-currency government bond ratings to positive from stable, indicating the ratings are closer to being upgraded.

The main drivers of growth have been traditional exports such as mining, agriculture, fisheries and increased infrastructure investment. Non-traditional agricultural and minerals exports are also doing well.

Peru currently benefits from various preferential trade arrangements, which cover the most important export products and markets. Peru's Free Trade Agreements with the US and China came into force in early 2009 and 2010 respectively. The EU-Peru trade agreement should come into effect in 2012. Negotiations on other trade agreements with Asian countries such as Japan, Korea and Singapore are progressing.

The strongest areas economically are Lima and the northern coastal areas (Piura, Paita, Trujillo, Lambayeque), where growth is being driven by the agricultural export boom. Although other traditionally poor areas in the northern and southern highlands are now also starting to see some benefits from the expansion of mining and the redistribution of mining tax income, it is not being fully utilised. World Bank endorsed figures indicate that overall poverty levels between 2005 and 2009 fell from 48.7% to 34.8%. This downward trend in poverty is essential given the large increase in food prices in 2008 and the limited growth in 2009 resulting from the global financial crisis. Nevertheless, the poverty rate varies significantly by geographical area, with some regions recording rates above 60%.

According to the Doing Business report 2010 by the World Bank's International Finance co-operation, Peru is the second largest reformed economy in Latin America. It ranked 56th in the world (previously ranked 65th) after implementing reforms to facilitate business openings, property registration, contract fulfilment, tax payments, employee hiring and foreign trade.

The second phase of the Camisea natural gas project is underway. This will include several regional gas pipelines, a liquefaction plant and an export terminal. The country's first petrochemical plant is also planned and will use by-products from Camisea. A number of regional airports and regional water treatment services, regional ports, major roads, electric grid improvements, communications networks, oil and gas lots and natural gas pipelines are among recent and upcoming tenders. The government looks to private investors to fund improvements in healthcare and other state services, using PPP models. Renewable energy will become increasingly important as Peru looks to diversify its energy matrix. The first contracts for projects in wind, solar and biomass were signed in March 2010 following a 2008 Renewable Energy Promotion Law.

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HISTORY

An advanced indigenous Inca civilisation flourished in Peru throughout the 15th century, emerging as a powerful state to form the largest empire in pre-Colombian America. With its capital in Cuzco, the Inca Empire stretched from northern Ecuador to central Chile. The first Spanish landings were in 1531 and in 1533, led by explorer Francisco Pizarro, they captured Cuzco. Pizarro founded the capital city of Lima in 1535 and by 1542 had consolidated control throughout the country. Lima became the seat of the Viceroyalty of Peru in 1543, overseeing the administration of the majority of Spanish colonies in South America.

Gold and silver from Peru became the foundation of colonial Spanish wealth and power in South America, which lasted until the early 19th century. Following the military of Jose San Martin of Argentina and Simón Bolívar of Venezuela Peruvian independence was declared on 28 July 1821. However, it was not until December 1824 that, following a long struggle, forces led by General Antonio Jose de Sucre finally defeated the Spanish at Ayacucho. After unsuccessful attempts to regain her former colony, Spain formally recognised Peru's independence in 1879.

Following independence, Peru was embroiled in a number of territorial disputes with its neighbours. Most seriously, Peru and Bolivia engaged in a four-year war against Chile (1879-83). Chile's victory in this 'War of the Pacific' resulted in a territorial settlement with Peru ceding the provinces of Arica and Tarapaca. Peru and Ecuador clashed in 1941 after which the Rio Protocol sought to establish an agreed land boundary. However, continued disagreement led to further bouts of armed conflict in early 1981 and again in early 1995. An historic peace accord signed in 1998 demarcated the Peru/Ecuador land border, and in 1999 Peru and Chile implemented the last outstanding article of their 1929 border agreement. Peru and Ecuador agreed their final outstanding maritime border in April/May 2011.

Peru continues to dispute her maritime border with Chile, and in January 2008 lodged a case at the International Court of Justice in The Hague. A final decision is expected in 2012.

BBC News Country Timeline: Peru (http://news.bbc.co.uk/hi/english/world/americas/newsid_1224000/1224690.stm)

Historically, the military have played an important role in Peru. Coups have been a feature of Peru's history and intermittently disturbed civilian constitutional government. The most recent period of military rule (1968-80) began when General Juan Velasco Alvarado overthrew elected President Fernando Belaunde and embarked on an ambitious program of radical reforms. General Franciso Morales Bermundez replaced him in 1975 and presided over the return to civilian government in accordance with a new constitution created in 1979. In elections held in May 1980, Belaunde was re-elected by a large majority.

In the early 1980s, 'El Niño' weather related problems, a continued economic crisis and hyperinflation caused Belaunde's popularity to slide. Cultivation of illegal coca in the eastern Andes and the emergence of the left-wing terrorist organisations, Sendero Luminoso (Shining Path) and Movimento Revolucionario Tupac Amaru (MRTA) seriously destabilised the country.

In 1985, Alan Garcia, backed by his APRA party, won the presidential race, witnessing the first democratic succession for 40 years. Continuing economic problems during this administration led to a further bout of hyperinflation in the late 1980s and coca cultivation continued to increase to unprecedented levels.

In the 1990 elections, voters turned to college lecturer, Alberto Fujimori, who surprised many in coming from obscurity to the presidency. He quickly introduced heterodox economic measures to stabilise inflation. Faced with opposition in Congress, Fujimori staged an 'auto-coup' in April 1992, revising the constitution, calling new congressional elections and pushing through free-market economic reforms. Fujimori's government also took a hard line against domestic terrorism. During his Presidency, Shining Path's leader, Abimael Guzman, was captured and imprisoned.

Fujimori's decision to seek a constitutionally questionable third term and his subsequent tainted victory in June 2000 bought political and economic turmoil. A major corruption scandal linked to his Security Chief Vladimiro Montesinos broke in September 2000, weeks after his third inauguration, forcing Fujimori to announce new elections in which he would not participate. Under mounting pressure, he fled to Japan, from where he resigned by fax. Congress did not accept his resignation, but ruled him morally incapable of holding office for 10 years.

A transitional administration under interim President Valentin Paniagua took office and oversaw free and fair elections in April and June 2001. Montesinos was apprehended in June 2001 in Venezuela and brought back to Peru to face trial. In 2002 he was sentenced to imprisonment for abuse of authority and illegally taking control of Peru's intelligence service. He has since been sentenced for a number of other crimes and remains on trial facing further criminal charges.

Despite the 10-year ban on Fujimori holding office, he announced his intention to contest the 2006 election. In November 2005, he travelled from Japan to Chile where he was detained by the Chilean authorities. In September 2007, Fujimori was extradited to Peru to face human rights and corruption charges. The separate trials lasted from December 2007 to October 2009. Fujimori was convicted on all charges. His sentences range from six to 25 years and are being served concurrently. Fujimori has announced he will appeal the verdicts.

Alejandro Toledo (Peru Posible) beat a resurgent Alan Garcia (APRA) in the national elections in June 2001 to become Peru's first indigenous President. Toledo led a post transitional government that pursued democratic reform and modernisation of the state. His administration was committed to orthodox economic policies and the country achieved strong and sustained economic growth throughout his period in office. Nevertheless, Toledo's administration was tainted by a number of scandals and struggled with low levels of popularity (under 10%) for much of its term in office.

Alan Garcia ran as the outside candidate in the 2006 elections, beating nationalist candidate Ollanta Humala in the second round. He took office on 28 July 2006 and undertook to continue the sound economic management of Toledo's administration. Peru today enjoys some of the strongest economic growth of any South American country. President Garcia has overseen the signing of numerous free trade agreements with neighbouring countries, Japan, South Korea, USA and the EU. He has worked tirelessly to improve Peru's relations with its neighbours, most recently signing the Pacific Accord to establish a new trade bloc between Peru, Chile, Mexico and Colombia.

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INTERNATIONAL RELATIONS

Relations with neighbours

Peru's relations with Ecuador have grown stronger in recent years, helped by the settlement of border disputes. In October 1998, Peru and Ecuador signed a peace treaty, which marked the end of the last and longest-running source of international armed conflict in the Americas. The agreement gave Ecuador access to, but not sovereignty over, 1 square kilometre of land at Tiwinza in the Cordillera del Condor border area, near the site of the brief war in January 1995. Both the Peruvian and Ecuadorian Congresses ratified the agreement in November 1998. The formal demarcation of the Peru-Ecuador border occurred on 13 May 1999. Their final outstanding maritime border dispute was settled in April/May 2011.

On 13 November 1999, Chile and Peru signed an agreement on certain frontier issues that had been outstanding since their signature of the Treaty of Lima in 1929. In July 2001 during the visit of Chilean President Lagos to Peru a joint declaration was signed creating a permanent bi-national Co-operation Committee chaired by Foreign Ministers, and a committee to develop greater bilateral understanding and co-operation on defence issues. A number of initiatives have since been launched to strengthen economic and political ties. Peru still disputes its maritime border with Chile and in January 2008 lodged its case at the International Court of Justice in The Hague.

Relations with the international community

Peru has been a UN member since 1949. Peruvian Javier Perez de Cuellar served as Secretary General from 1981-1991. Peru was recently elected to sit on the UN Human Rights Council for the period 2011 to 2014. As a founding member, Peru is an active member in the Andean Community, APEC and the WTO and Organisations of American States. It is an active participant in negotiations towards a Free Trade Area of the Americas. Peru has hosted a number of high-level international summits, including the EU-LAC Summit between leaders of Latin American, Caribbean and European Union countries (May 2009); the November 2008 APEC summit; and the OAS Summit in June 2010.

Relations with the UK

Bilateral relations have taken on a new dimension in recent years. Momentum has been sustained through a programme of inter-government and parliamentary visits, including HRH the Princess Royal in July 2007, former Foreign Office Minister, Chris Bryant in September 2009; Home Office Minister for Drugs and Crime, James Brokenshire, in September 2010; and Foreign Office Minister, Jeremy Browne in July 2011.

The UK and Peru work closely together in the areas of climate change and energy, economic development and trade, drugs and international crime, defence and democracy and governance. Peru is an increasingly popular destination for British tourists, with more than 67,000 visiting the country in 2008.

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GEOGRAPHY

Peru is located in Western South America bordering the Pacific Ocean between Chile and Ecuador. Bolivia (a 900km border), Brazil (1,560km) and Chile (160km) are located to the south and east and Ecuador (1,420km) and Colombia (1,496km) to the north. The whole of the western coast is desert with little rain. From this coastal shelf, the Andes rise steeply to a high Sierra, which is studded with groups of mountains and deep canyons. East of these mountains lies the vast jungle of the Amazon basin. The capital, Lima, to the west is the sprawling hub of the country.

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TRADE AND INVESTMENT

Trade and investment with the UK

According to Peruvian Government statistics the UK is the second largest investor (after Spain) in Peru. British investment increased by 181% over the last decade, rising to US$4372 million in 2010. British investment now represents 21% of total registered FDI in Peru as at December 2010. The largest investment sectors are mining, finance, industry and energy. British exports to Peru have grown steadily since 2002. During 2010 total bilateral trade between Peru and the UK amounted to US$416 million, up from US$371 in 2009. Total registered exports Peru-UK in 2010 were US$230 million and UK exports to Peru US$186 million, a ratio of 2:1. In 2010 the main exports from the UK included machinery, machinery parts and engines, followed by pharmaceutical products, chemicals and whisky.. The main exports from Peru to the UK in 2010 were metals, principally gold, tin, silver and zinc, together accounting for around 57% of the total. Agriculture produce, particularly asparagus, coffee, grapes, citrus fruits and avocados and fish products and textiles are all leading exports. Many British companies both large and small have a presence in Peru, either as fully incorporated companies or via representatives and agents.

UK Trade & Investment Country Profile: Peru (http://www.uktradeinvest.gov.uk/ukti/peru)

UK development assistance

Peru benefits from UK aid given via a number of routes – the World Bank, the EU, International Development Bank and block grants to some UK NGOs active in the country under DFID’s Global Partnership Programme arrangements. Over the 2007-13 period, the UK will contribute a total of £17.42million to EU development programmes in Peru. The UK provided around £2.5m of assistance to Peru following a devastating earthquake in August 2007.

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POLITICS

Gana Peru candidate, Ollanta Humala took office on 28 July 2011 having won the second round of the Presidential election with 52% of the popular vote. A former officer and military attaché, President Humala enters office on the promise that Peru’s poor will share the country’s mineral wealth and benefit from the economic growth it has brought, applying the more moderate systems of government seen in Brazil and Mexico.

Congressional elections echoed the first round success of Keiko and Humala, whose parties won the greatest proportion of seats in the 130-seat chamber. However, no one party has an overall majority. President Humala’s Cabinet appointments include four members of former President Alejandro Toledo’s Peru Posible Party.

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HUMAN RIGHTS

Human rights problems featured prominently in Peru during the violent conflict between Shining Path, the government and the armed forces in the 1980s and 1990s. It is estimated that approximately 69,280 died as a result of the conflict.

In 2001, interim President Valentin Paniagua established the Truth and Reconciliation Commission to investigate abuses by both the terrorist organisations and the security forces. The Commission's mandate was to analyse, investigate and ascribe responsibility for abuses and to promote reconciliation and peace. The Commission's final report was published in August 2003 and made recommendations for reparations and institutional reforms. It identified the major perpetrator of human rights violations as the Shining Path. It criticised the failures of a number of organisations, including the Catholic Church, to take a stand against known human rights abuses when they occurred.

Although many of its recommendations are still to be implemented, some progress has been made. A reparation plan was approved by the Peruvian Congress in July 2005 and in October 2006 a committee was established to implement this plan. The first reparation payments to communities affected were made in June 2007. As part of its work, the TRC created a photographic archive, which has since been on permanent exhibition in the national museum. A permanent memorial museum is currently scheduled for construction on the Costa Verde.

Peru is firmly committed to meeting international standards in the observance of human rights. The country returned to the jurisdiction of the Inter-American Court of Human Rights in January 2001. However, some human rights concerns remain. Most criticism is linked to the judicial system, particularly the slow administration of justice. Conditions in Peruvian prisons are also harsh, aggravated by overcrowding, lack of sanitation and poor health care. Poverty and extreme poverty, particularly in the rural areas of the country, remain a widespread problem. Progress is being made in addressing this issue. Figures showed a drop in overall poverty from 44.5% in 2006 to 36.2% in 2008, with a corresponding fall in extreme poverty from 16.1% to 12.6%.

UK support for Human Rights

The UK continues to monitor human rights in Peru and to support initiatives in this area. Support includes fund for projects with Peruvian NGOs to support victims of the internal conflict and to promote institutional reforms and best practice, in particular within the judiciary. This year we have chosen to focus funding on projects tackling the escalating threat many face from human trafficking.

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CLIMATE CHANGE

Peru is highly vulnerable to climate change. It has the largest percentage of tropical glaciers in the world and as those above 5,500 metres above sea level are lost, Peru’s water and energy supplies are threatened. As most of Peru’s population is concentrated on the coast, the potential for negative social and economic impacts is high. Peru’s booming agriculture, fishing and livestock industries all stand to be affected.

As the second Amazon country (around 13% of the Amazon is within Peru’s borders), Peru has an important role to play in the conservation of the world’s rainforests. It has pledged to bring its deforestation level to zero by 2019.

UK support for action on climate change

We have a very strong relationship with the Peruvian government on climate change. We are working together on a series of projects to increase decision-makers’ and opinion formers’ knowledge and understanding of climate change. These include studies on the impacts of climate change in the fisheries and mining sectors. These studies have strong private sector support and will form part of a wider study on the economic impacts of climate change in South America which we are supporting with the United Nations and Inter-American Development Bank. With the BBC we are supporting a regional programme of workshops to explore the challenges of communicating on climate change and we are also bringing regional financial decision makers to discuss the implications for Peru and South America of the various finance mechanisms which have been tabled for debate at the UN conference on climate change in Copenhagen in December 2009.

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Last Updated: July 2011

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