Peru country brief - Department of Foreign Affairs and Trade
Peru country brief
Peru country brief
Overview
As resource-rich countries bordering the Pacific Ocean, Australia and  Peru enjoy a positive relationship which has expanded quickly in recent  years. The mining and energy sectors, education and people-to-people ties  form the foundation of Australia's relations with Peru. The two countries  are also engaged in a wide range of international bodies, including APEC, the  Pacific Alliance and the United Nations.
Reflecting  Australia's commitment to enhancing its engagement with Peru and with Latin  America more generally, Australia re-opened its Embassy in Lima in September 2010. Australia had first opened  an Embassy in Lima in 1968, but closed it in 1986. The Peruvian government  established consular representation in Sydney as early as 1930 and an Embassy  in Canberra in 1963. Peru now maintains an Embassy in Canberra and a  Consulate-General in Sydney. Australia and Peru celebrated 50 years of  diplomatic relations in 2013.
The  Republic of Peru is a large country on the west coast of South America with an  area slightly smaller than that of the Northern Territory. Peru is dominated by  three main geographical regions: the arid coastal area, the high mountains of  the Andes running down the centre of the country, and the low tropical Amazon  basin in the east. Peru borders Chile in the far south, Bolivia in the  south-east, Brazil in the east and Colombia and Ecuador in the north. The name  Peru is believed to have come from one of the first encounters between the  Spanish and indigenous peoples of northern Peru, who when asked what the area  was called said 'Virú', which was pronounced 'Peru' by the Spanish. Peru's  capital is Lima.
Peru's  population is approximately 31.9 million (2015). Spanish, Quechua and Aymara  are the official languages. The main ethnic groups are indigenous (45 per  cent), mestizo (37 per cent), European (15 per cent) and a small population of  African, Japanese and Chinese. Roman Catholicism is the main religion, making  up around 80 per cent and Evangelical Christians number around 12 per cent of  the population.
Political overview
Background
From  1532-33, Spanish conquistadores led by Francisco Pizarro defeated the Incan  empire that became part of the vice-royalty of Peru. The vice-royalty, the largest  in Latin America, was created in 1542. Peru gained independence from Spain on  28 July 1821, following a proclamation by the leader of the independence  struggle, Argentine Jose de San Martin. However, liberation was not completed  until December 1824, when the Venezuelan Simon Bolivar, defeated a Spanish army  in Junín and Venezuelan Marshall Antonio Jose de Sucre defeated a Spanish army  at Ayacucho, ending Spain's rule in South America. Spain recognised Peru's  independence in 1879.
System of government
Peru  is a republic headed by a president directly elected for a five-year term.  Under Peru's constitution, the president cannot stand for re-election for a  consecutive term, but can do so at a later time. The legislature consists of a  single 130-member chamber and can be dissolved once during a presidential term.  The chamber is headed by a president whose term lasts one year. Peru is divided  into 25 administrative regions and 24 geographical departments plus the  constitutional province of Callao. Regions and departments are divided into  provinces, which are in turn sub-divided into districts. Provincial and  district-level leaders are popularly elected every four years and can be  recalled by referendum. Regions hold political, economic and administrative autonomy.  The metropolitan area of Lima, the capital city, is governed by a mayor,  separate to the surrounding region. Congressional, provincial and municipal  elections were held in April 2016.
The  President, as head of government and head of state, appoints the head and  members of a Council of Ministers, the country's principal executive body. The  powers of the head, or president, of the Council of Ministers are similar to  those of a prime minister. The judicial hierarchy includes provincial and departmental  courts and is headed by the Supreme Court in Lima. There is a separate  Constitutional Court which supervises the Constitution of the country.
Recent developments
In general, Peruvian politics is dominated by personalities rather than  political parties. This results in a colourful and fluid political  environment with changing coalitions. It can also lead to instability in  Congress, with the legislature often unable to reach agreement on important  issues such as appointments to key bodies. 
 Mr  Pedro Pablo Kuczynski Godard (PPK) was inaugurated President of Peru on 28 July  2016. He won the second round run-off election on 5 June 2016 with 50.12 per  cent of the vote to his contender, Ms Keiko Fujimori´s 49.88 per cent, a  difference of just 41,438 votes (of 18.3 million ballots cast). Fujimori's  Fuerza Popular party holds a strong majority in Peru's congress with 73 out of  130 seats, giving her significant influence over the legislative agenda.  Kuczynski´s party (Peruanos por el Kambio (PPK)) has 18 seats in the new  Congress.
PPK  succeeds President Ollanta Humala (centre-left party, Gana Perú) who in turn  replaced President Alan Garcia in 2011. Garcia succeeded Alejandro Toledo in  2006. Toledo had been elected President in 2001 following the conclusion of a  provisional government led by Valentin Paniagua. Paniagua's government had  lasted eight months following former President Alberto Fujimori's flight to  Japan after he was charged with human rights and corruption offences.   Alberto Fujimori was subsequently extradited to Peru in 2007 and is  currently serving a 25-year jail term. Keiko Fujimori is Alberto Fujimori's  daughter.
Macroeconomic reform, market liberalisation and the implementation of  policies designed to attract foreign investment began during the Fujimori era  and marked the administrations of Toledo, Garcia and Humala during the period  2001-2016.
President  Kuczynski's Government's "Vision 2016-2021" for Peru is based on four pillars:  Opportunity, Public Security, Employment and a State Closer to its People. The  Government's priorities are infrastructure investment, a modern and sustainable  mining sector, improved health and education services, reduced corruption, a  professional police and judiciary, reducing the informal economy, less red tape  and increased government efficiency.
In  terms of infrastructure development, the Government's focus will be on  developing transport infrastructure (roads, rail, airport and ports), energy  (gas pipelines), telecommunications (high-speed internet access) and water  management (including in export-oriented sectors and urban water services). To  achieve a modern and sustainable mining industry, President Kuczynski seeks  international investment. Managing social conflict around mining projects has  been, and continues to be, a key preoccupation for the Kuczynski Government, as  it was for previous administrations. Foreign investment in the mining sector  has grown steadily in recent years, despite unrest.
Peru's  strong economic recovery since about 2001 has sharply reduced poverty - in  2014, around 22.7 per cent of the population was living in poverty, down from  42.4 per cent in 2007.  This downwards trend is likely to continue in the  years ahead as long as the economic consensus is maintained.  However,  despite strong economic growth in recent years, large regional disparities  persist.
Some  remnants of the Shining Path terrorist movement, which was responsible for a  violent uprising throughout Peru in the late 1980s and early 1990s, still  operate in remote areas, with the highest concentration located in the Valle de  los Rios Apurimac, Ene and Mantaro (VRAEM) in the south central Andes. The small  numbers of adherents to the organisation are now more involved in  drug-trafficking and other criminal activities.
In  2012, Peru surpassed neighbouring Colombia as the world's largest producer of coca leaf, the raw material for cocaine. Peru has  since stepped up eradication aggressively, such that coca production in 2014  was at its lowest level since 1998. In 2015, the Peruvian Government decided to  stop eradication in the VRAEM and encourage farmers to grow alternative crops such as coffee and cocoa . Peru now produces less cocaine than Colombia. Violence  related to the illegal production and transport of narcotics remains an issue,  particularly in several coca producing areas and in some of Peru's northern  coastal cities.
Foreign Policy
Peru  shares its borders with Ecuador, Colombia, Brazil, Bolivia and Chile. Peru's  relationships with its neighbours are generally cooperative, increasingly so  with those countries which are part of the Pacific Alliance (Mexico, Colombia  and Chile in addition to Peru). Support for greater regional integration in  Latin America is an important priority for President Kuczynski. However, Peru  and Chile have been in dispute over territory. On 27 January 2014, the  International Court of Justice issued its final judgment over a longstanding  maritime border dispute between Chile and Peru, ultimately requiring Chile to  cede territory. Both countries have agreed to abide by the ruling. In 2015,  Chile and Peru entered into a new territorial dispute for a triangle of desert  north/north-east of Punto Concordia, Chile. The case is yet to be resolved in  The Hague.
Peru  has publicly supported Argentina's position over the dispute with the United  Kingdom on the Falkland Islands. It has also mediated in the land-border  dispute between Bolivia and Chile.
Peru  participates in a wide range of international and regional fora, including the  UN, the WTO, the Organization of American States (OAS), APEC (of which Peru is  the current chair), IMF, the World Bank, the Union of South American States  (UNASUR), the Forum for East Asia-Latin America Cooperation (FEALAC), Andean  Community of States, the Community of Latin American and Caribbean States  (CELAC), and the Pacific Alliance, for which Peru was the July 2015-July 2016  pro-tempore President. Peru was a non-permanent member of the UN Security  Council in 2006 and 2007. Peruvian diplomat, Javier Perez de Cuellar, served as  UN Secretary General from 1981 to 1991.
The  Peruvian government has good relations with the United States, which is Peru's  second largest trading partner and main partner in efforts to combat drug  trafficking and the Shining Path. The United States and Peru have had a Trade  Promotion Agreement [essentially a Free Trade Agreement (FTA)] in force since  February 2009.  In March 2013, the Peru-EU FTA entered into force.
Indicating  the importance of Peru's bilateral relationship with China, Mr Kuczynski's  first international visit as President was to China. China and Peru established  diplomatic relations in 1971 and a strategic partnership in November 2008. They  have had a free trade agreement in force since March 2010. China is Peru's  largest trading partner. Bilateral trade was US$15.7 billion in 2013, with  Peru's exports to China worth US$7.3 billion. In 2014, China also became Peru's  main supplier of capital goods and leading investor, with $14 billion invested.  Chinese investment is particularly growing in Peru's mining sector.  Chinese-owned and Australian-managed mining company, MMG Ltd, operates the Las  Bambas project in Cotabambas, located in the Eastern Andes (Apurimac region) of  Peru. It is expected to produce 400,000 tonnes of copper per year in the first  five years of production, making it one of the top three copper mines globally.  Over its anticipated 20-year mine life, Las Bambas will also produce gold,  silver and molybdenum.
Peru  and China also conduct security and defence cooperation. Since 1998, Peru and  China have hosted visits by high-level military officers. Chinese Premier Li  Keqiang visited Peru in May 2015 to further strengthen the two countries'  comprehensive strategic partnership. This was the first visit by a Chinese head  of government in 20 years.
Bilateral relations
The  relationship between Australia and Peru has expanded quickly since Australia re-opened  its Embassy in Lima in 2010. The key areas of interest include mining and  energy, education, tourism and people to people links.
In  November 2011, Australia and Peru signed a Memorandum of Understanding (MOU) to  promote Bilateral Consultations and Cooperation. Australia and Peru have had a  bilateral Investment Promotion and Protection Agreement since 1997. The  Australian Bureau of Meteorology has an MOU with its Peruvian counterpart, the  National Meteorology Service, to facilitate cooperation on research into the El  Niño climatic phenomenon, among other topics. In April 2012, Australia and Peru  signed an MOU on Development Cooperation. An Air Services Agreement between the  two countries is close to finalisation.
Australia  and Peru work together in a number of international fora, including the United  Nations.  In the WTO, the Cairns Group and APEC, Australia and Peru  cooperate to promote greater liberalisation of trade and investment and to  enhance regional integration. Australia hosted APEC in 2007, Peru in 2008. Peru  is the 2016 Chair of APEC.  Both countries are part of the group of twelve  APEC members who negotiated the Trans Pacific Partnership Agreement, which was  signed in February 2016 in New Zealand. Australia and Peru are members of the  Forum for East Asia-Latin America Cooperation (FEALAC), and Australia is an  observer to the Pacific Alliance.
Both  governments wish to work more closely together and after a period of few  high-level visits, there are now regular exchanges at senior levels of government.
In  July 2015, Foreign Minister Julie Bishop visited Paracas, south of Lima, to  represent Australia at the 10th Summit of the Pacific Alliance, in the margins  of which she also met Peruvian Foreign Minister Ana María Sánchez and Education  Minister Jaime Saavedra. At that Summit, Ms Bishop announced Australia would be  funding three education projects for Pacific Alliance countries. The first of  these projects was implemented in 2015 by the Australian Department of  Education and Training. The second is under implementation, also by the  Australian Department of Education and Training, and will provide Pacific  Alliance countries with vocational training in the transport and logistics  sector.
In  February 2015, Environment Minister, the Hon Greg Hunt MP, visited Lima for  talks with his counterparts, while the former Speaker of the House of  Representatives, the Hon Bronwyn Bishop MP, led a parliamentary delegation to  Peru in January 2015.
In  December 2014, Australian Minister for Foreign Affairs, the Hon Julie Bishop  MP, and the former Australian Minister for Trade and Investment, the Hon Andrew  Robb AO MP, visited Lima for the climate change Conference of the Parties  (COP20) and a program of bilateral meetings.
In  2001, the Australian Government established the Council on Australia-Latin America Relations  (COALAR) which aims to enhance commercial, political and cultural relations between  Australia and Latin America. Since its inception, COALAR has been active in  promoting business, education, tourism and cultural links between Australia and  Latin America. For updates on COALAR activities and information on the annual  grants program, follow COALAR  on Facebook .
People to people links
Peruvians  have been in Australia from at least the late 1800s, with the 1901 census indicating  28 Peruvians in Australia at the time. Migration from Peru to Australia  remained low until 1986, when numbers emigrating from Peru to Australia grew  into the hundreds-per-year. Australia's Peruvian community consists of around  8,440 Peru-born persons (2011 Census). More information can be found at the Department of Social Services Community Information  Summary page .
Peru  is Australia's 71st largest inbound market by visitor arrivals. In 2015, there  were 3,500 short-term arrivals from Peru, an increase of  12.7 per cent on the previous year. Over the last five years, the  average annual growth rate in arrivals from Peru was 7.8 per cent.
Nearly  40,000 Australians visited Peru in 2015, the majority for tourism. This number  caps impressive annual increases, averaging over 15 per cent per year in  2011-2012 and 2013-14. The increase reflects the growing business and tourism  ties between Australia and Peru.
In  2006, Australia and Peru signed an MOU on cooperation in education.  Institutional educational ties are strong and growing. Many Australian  Universities (including Edith Cowan, Griffith, Canberra, Tasmania, Queensland,  Adelaide, Macquarie and La Trobe) have agreements with their Peruvian  counterparts. As at December 2015, there were 1,600 Peruvian students enrolled  to study in Australian educational institutions (year to date). Australia was  selected in 2012 to be the first country to host post-graduate Peruvian  students sent abroad on full scholarship by Peru's National Scholarship Agency,  PRONABEC. Australia is now the most popular English-language destination for  these scholars. The education cooperation MOU will be renewed in 2016.
Since  2011, Peru has participated in the Australia Awards Fellowships Program. A  total of 54 Peruvians have received Fellowships, which have given them  practical training in Australia on a range of topics, including planning and  implementing public private partnerships (PPPs), education policy, water  resource management and sustainable mining.
Development assistance
From  2010 to 2014, Australia provided $100 million in official development  assistance to Latin America, including 254 Australia Awards scholarships. Peru  received 19 Australia Awards Scholarships. To support sustainable economic  development in Peru, Australia contributed $2 million toward the SALTA project  that provided 100,000 female micro-entrepreneurs with information on financial  literacy and business development. The project was implemented in partnership  between the Australian Government and the Inter-American Development Bank.
Australia's  regional aid program has now ended, though some activities that have already  been funded will continue until 2017.
Economic overview