Peru: Country Overview and U.S. Relations

Peru: Country Overview and U.S. Relations

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Updated April 1, 2024
Peru: Country Overview and U.S. Relations
Peru is a geographically and ethnically diverse country
lower income and Indigenous voters responded to his
encompassing portions of the Amazon Basin, the Andean
campaign pledges to alleviate poverty and identified with
highlands, and the Pacific coast of South America (Figure
his rural background.
1). Since the early 2000s, Peru has sustained its democratic
institutions and outpaced its neighbors in terms of economic
Figure 1. Peru at a Glance
growth while reducing poverty and improving security.
Nevertheless, some observers argue that endemic
corruption, stark inequality, and a growing center-periphery
divide threaten the future of democracy in Peru, as well as
the country’s economic growth prospects.
The United States works closely with Peru to stem
narcotics-related transnational crime, promote bilateral
trade, and advance shared democratic values. Some
Members of the 118th Congress have monitored conditions
in Peru and U.S. policy toward the country. During the
remainder of the second session, Congress may consider
whether or not to continue shaping the bilateral partnership
through foreign assistance appropriations and other
legislative and oversight efforts.

Source: CRS with statistics from CIA World Factbook (CIA); Instituto
Political Situation
Nacional de Estadística e Informática (INEI); International Monetary
Peru’s 1993 constitution, written under the authoritarian
Fund’s World Economic Outlook, October 2023 (IMF); Trade Data
government of former President Alberto Fujimori (1990-
Monitor (TDM).
2000), established a representative form of government
with independent executive, legislative, and judicial
Upon taking office, Castillo faced political and economic
branches. Political and economic power historically have
headwinds that appear to have been exacerbated by his
been concentrated in the coastal capital of Lima, fueling
difficulty managing his administration. Calls by Perú Libre
resentment among the country’s interior and Andean
ministers to nationalize sectors of the economy rattled
populations. These groups assert they are excluded from
markets. Frequent cabinet reshuffles did not alleviate
decisionmaking with respect to how the wealth generated
domestic and international skepticism about Castillo’s
by the country’s export-led economy is distributed.
ability to govern Peru and manage its economy. Opposition
parties in Peru’s congress tried unsuccessfully to impeach
Since the early 2000s, Peruvian politics have been shaped
Castillo twice less than one year into his presidency.
by ideologically charged debates over the distribution of
proceeds from the mining sector, representation of rural and
On December 7, 2022, Castillo attempted what some
Indigenous communities in national politics, and the legacy
analysts described as a “self-coup,” when he tried to
of the Fujimori years. Corruption scandals involving
dismiss congress and rule by decree, reportedly to preempt
presidents and other high-level officials have shaken public
a third impeachment vote. Instead, Peru’s congress met and
trust in Peru’s political leadership. The 130-member
immediately impeached Castillo, who was facing numerous
unicameral congress is fragmented, and political party
corruption allegations. Castillo was later arrested and
affiliations are fluid, complicating efforts to build
charged with violating the constitution and corruption; he
governing coalitions. The constitution’s low bar to
remains in pretrial detention as of March 2024.
impeachment and removal by congress has weakened the
presidency, leading to the impeachment or forced
Boluarte Administration and the Political Crisis
resignation of four of six presidents since 2018. Actions
Under the constitutional rules of succession, Vice President
taken since September 2023 by the Peruvian congress to
Dina Boluarte became Peru’s first woman president.
remove members of a judicial oversight entity have also
Boluarte had been elected on the Perú Libre party slate but
prompted observers and some Members of Congress to
distanced herself from Castillo and the party once in office.
voice concerns about judicial independence.
Boluarte faced an immediate challenge to her authority
from Castillo’s rural and Indigenous supporters, who
Castillo Administration and Impeachment
considered the former president a champion of their rights.
General elections in April 2021 brought to office President
Following Castillo’s arrest, tens of thousands of his
Pedro Castillo of the leftist Perú Libre (Free Peru) party.
supporters staged protests across much of Peru’s interior.
Castillo drew support mainly from Peru’s rural areas where
Protesters’ demands included Castillo’s release, President
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Peru: Country Overview and U.S. Relations
Boluarte’s resignation, early elections, and the convening of
system. It also seeks to strengthen governance, combat food
a constitutional convention. In southern Peru, protesters set
insecurity, promote sustainable livelihoods, and support
up hundreds of roadblocks and occupied several dozen
Peru’s efforts to assist and integrate the 1.5 million
regional airports, crippling much of the economy.
Venezuelan refugees and migrants residing in Peru.
In response to the protests, Boluarte declared a state of
Congress may consider whether to meet the President’s
emergency in southern Peru and ordered the armed forces
funding request for FY2025. Congress did not designate an
and Peruvian National Police (PNP) to clear the roads and
overall funding level for Peru in the Department of State,
restore airport services. In two separate incidents, in
Foreign Operations, and Related Programs Appropriations
December 2022 and January 2023, the PNP and soldiers
Act, 2024 (P.L. 118-47, Division F) but directed U.S.
allegedly fired live rounds at unarmed protesters and
agencies to provide some aid to communities supporting
bystanders, killing dozens. An Inter-American Commission
Venezuelan migrants in countries like Peru. H.Rept. 118-
on Human Rights report examining the protests found
146, which accompanied an earlier House-passed version of
evidence of human rights abuses committed by security
the FY2024 foreign aid appropriations bill (H.R. 4665),
officials and instances of protester violence and vandalism.
encouraged U.S. agencies to “maintain current levels of
assistance” for Peru. In early 2023, some Members of
Despite deep unpopularity, the Boluarte government has
Congress called for a suspension of U.S. security aid to
remained in power with support from conservative parties
Peru in response to alleged abuses committed by Peruvian
in congress. Although some Peruvian lawmakers have
security forces. To date, Congress has opted not to impose
introduced bills to hold early general elections in 2024, the
specific human rights conditions on security aid to Peru.
congress has repeatedly rejected the bills.
Economic and Social Conditions
PRC’s Presence in Peru’s Economy
Foreign infrastructure investment in Peru by firms linked to
Since the early 2000s, Peru’s economy has been one of the
the PRC has grown since the 2010s, a trend accelerated by
strongest macroeconomic performers in Latin America,
Peru’s accession to the PRC’s Belt and Road Initiative in
characterized by an open investment environment, robust
2019. PRC state-owned firms have acquired controlling
commodities exports, and low public debt, according to the
equity stakes in several Peruvian critical infrastructure
World Bank. Peru also halved its official poverty rate, from
companies, including large-scale mining and electricity
42% in 2007 to 20% in 2019.
generation and distribution companies. In February 2024, a
Peru was one of the countries most affected by the COVID-
Peruvian industry group expressed concern that companies
19 pandemic in terms of health and economic impacts and
linked to the PRC would control Lima’s entire electricity
the erosion of the social gains achieved in the previous
distribution market after Peruvian officials approved the
decade, according to the World Bank. The pandemic caused
sale of two utility companies to a PRC state-owned firm.
a sharp rise in unemployment, a spike in poverty, and an
President Boluarte and PRC president Xi Jinping discussed
11% contraction in gross domestic product (GDP) in 2020.
deepening trade and investment ties during a bilateral
The economy recovered in 2021, with 13.3% GDP growth,
meeting at an Asia-Pacific Economic Cooperation (APEC)
but growth slowed to 2.7% in 2022 and an estimated 1.1%
event in late 2023. President Boluarte has stated that the
in 2023, according to the International Monetary Fund.
first phase of a $3.5 billion deep water port being built near
Experts attribute the slowdown to tighter global financial
Lima by the PRC state-owned firm COSCO Shipping is
conditions, reduced private investment because of political
expected to be complete in November 2024, when Peru is
instability, and cooling demand for Peru’s mineral exports.
to host the next APEC summit. Some observers contend
U.S.-Peru Relations
that the port will expedite shipping between Asia and the
region, expanding regional trade opportunities, while some
The United States has maintained close bilateral ties with
U.S. national security experts have voiced concerns that the
successive Peruvian governments, including that of
PRC majority-owned port could serve a dual commercial-
President Boluarte. Under the 2009 U.S.-Peru Trade
military use and facilitate military intelligence gathering.
Promotion Agreement (P.L. 110-138), U.S. trade with Peru
more than doubled, from $9 billion in 2009 to over $21
Some Members of Congress also have expressed concerns
billion in 2023. Some Members of the 118th Congress have
about the PRC-backed port project. Congress may consider
expressed continued support for the U.S.-Peruvian
whether or not to enact legislation to counter Chinese
partnership. Some other Members have raised concerns
influence in Peru’s economy and/or bolster U.S. commerce
about democracy and human rights in Peru and Peru’s
with Peru. Several bills that seek to expand U.S.
relations with the People’s Republic of China (PRC).
alternatives to PRC investment for critical infrastructure
Congress may continue to monitor the situation in Peru and
have been introduced in the 118th Congress. For example,
could consider legislation to shape bilateral relations.
H.R. 7571 and S. 3878, companion bills referred to as the
Americas Act, would provide a pathway for countries in the
Foreign Assistance
hemisphere to join the U.S.-Mexico-Canada Trade
The Biden Administration requested $107.6 million in
Agreement, among other incentives intended to encourage
bilateral foreign assistance for Peru for FY2024 and $94.8
U.S. companies to relocate supply chains to the region.
million for Peru in FY2025; the Administration allocated
$100.4 million to Peru in FY2023. U.S. assistance for Peru
Joshua Klein, Analyst in Foreign Affairs
aims to reduce the production and trafficking of cocaine,
IF12372
mitigate the impact of transnational crime, and increase
citizen security by strengthening Peru’s criminal justice
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Peru: Country Overview and U.S. Relations

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