9Country ProfileA rich history provides a mix of culture and languagesMetals and minerals are among the key exportsThe per...
COUNTRY PROFILE SNAPSHOT                                                11                                                ...
12                                      COUNTRY PROFILE SNAPSHOT                                                          ...
COUNTRY PROFILE OVERVIEW                                                                   13                             ...
14                                    COUNTRY PROFILE OVERVIEW                                                            ...
COUNTRY PROFILE OVERVIEW                                                                       15Processes (ONPE) organise...
16                                   COUNTRY PROFILE OVERVIEW                                                             ...
COUNTRY PROFILE ANALYSIS                                                                   17                             ...
18     COUNTRY PROFILE INTERVIEW     President Ollanta Moisés Humala Tasso     Spreading prosperity     OBG talks to Presi...
COUNTRY PROFILE INTERVIEW                                      19What is your strategy to reform education to devel-      ...
20     COUNTRY PROFILE INTERVIEW     Juan Manuel Santos, President of Colombia     Regional integration     OBG talks to J...
COUNTRY PROFILE INTERVIEW                                    21   The greatest risk our economies currently face is       ...
22      COUNTRY PROFILE INTERVIEW     Rafael Roncagliolo, Minister of Foreign Affairs     A stronger voice     OBG talks t...
COUNTRY PROFILE ANALYSIS                                                                    23                            ...
24                              COUNTRY PROFILE ANALYSIS                              The 2011 election involved a number ...
Oxford Business Group - Peru 2012 Report
Oxford Business Group - Peru 2012 Report
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Oxford Business Group - Peru 2012 Report

  1. 1. 9Country ProfileA rich history provides a mix of culture and languagesMetals and minerals are among the key exportsThe percentage of urban residents continues to growBigger roles for political parties and alliancesIssues of social inequality more prominent in politics
  2. 2. COUNTRY PROFILE SNAPSHOT 11 The past decade has seen political stability and economic liberalisationThe perfect mixDiversity in landscape and population in a country with a rich historyA major metals and minerals exporter, Peru experi- of the Republic of Peru, whose members are elect-enced steady growth for most of the 2000s and rap- ed by proportional representation through a partyid expansion in 2007 and 2008 on the back of high list system every five years and in tandem with thedemand for key exports such as copper. The coun- presidential elections. In addition to passing laws,try avoided negative growth in 2009 in spite of the the Congress must approve the ministers appoint-worldwide economic crisis and reduced commodi- ed by the president.ty prices, and the economy began to once again see LOCAL GOVERNMENT: Peru is administratively divid-greater success in 2010, when growth was estimat- ed into 25 regions or departments. Regions areed to have come in at 8.8%. themselves made up of provinces that are in turn While the 1980s and 1990s were characterised divided into districts. Each level of local governmentby varying degrees of political violence, stability and is appointed through popular elections.democratic rule have been consolidated since 2000. POPULATION: The country’s population stood atReforms begun in the 1990s and continued through- approximately 28.2m at the time of the last nation-out the 2000s have liberalised the economy and the al census in 2007 and was estimated by the UScountry welcomes foreign investment. Bureau of the Census to be 29.9m in July 2010. It grew Peruvians are proud of their country’s Amerindi- at an annual rate of 1.6% from 1993 to 2007, but pop-an heritage and the Incan and other Andean civili- ulation growth was estimated in July 2010 to havesations for which Peru is known throughout the slowed to around 1.1%. According to the 2007 cen-world. They are similarly proud of the country’s var- sus, 30.5% of the population is aged 14 or under, whileied geography, which includes part of the Andes 63.1% is between the ages of 15 and 64.mountain range, lush rainforest and a long coastline. Some 75.9% of the population resided in urbanGEOGRAPHY: With a surface area of 1.29m sq km areas in 2007, up from 70.1% in 1993. Just over halfand 2414 km of coastline, Peru is the third-largest of Peruvians live in the narrow Costa region, com-country in South America. The country can be divid- pared to around 31% in the central Sierra region anded into three geographic regions: the narrow coastal 13% in the eastern Selva jungle region, according tostrip of plains and deserts in the west (including the the 2007 census. Lima is by far the biggest city, withcapital Lima), known as the costa; the mountainous a population of 8.47m at the time of the 2007 cen-highlands in the centre, called the sierra; and the rain- sus. The second largest is the south-western city offorest-dominated east, known as the selva. Arequipa, with a population of 749,000, followed byGOVERNMENT: Peru is a constitutional presidential Trujillo, with 683,000 inhabitants.republic and the current constitution was ratified in RELIGION: The majority of Peruvians are Christian.1993. The president, who is elected by popular vote The constitution does not specify an official religionevery five years, appoints a 18-member Council of but “recognises the Catholic Church as an importantMinisters, headed by the prime minister. Presidents element in the historical, cultural and moral forma-cannot serve more than one consecutive term, but tion of Peru”. According to the 2007 census, thecan serve multiple non-consecutive terms. The cur- great majority of Peruvians – around 81% – arerent president, Ollanta Humala, was elected in July Catholic, while 12.5% are evangelical Protestants.2011 and will serve until 2016. There are small communities belonging to other The legislative branch consists of a single-cham- faiths, which include other Protestant denomina-ber, 130-member parliament known as the Congress tions, Judaism, Islam, and syncretic and Amerindian THE REPORT Peru 2012
  3. 3. 12 COUNTRY PROFILE SNAPSHOT which is performed throughout the country and has numerous regional variations. Other notable dances include the alcatraz and the festejo, which originat- ed in African slave communities and can take the form of competitions, and the huayno of the Andean highlands, which originates from Peru’s Inca civili- sation. Dancing is often accompanied by tradition- al Peruvian music. This includes both Andean music played on a variety of local instruments – such as panpipes and the charango, which is similar to a small guitar – and Afro-Peruvian music, which has its roots in African slave communities that came into the area in the colonial era. Football is very popular in Peru, as is bullfighting, with fights predominantly taking place on Sundays and public holidays. The most famous bullring is the 14,000-capacity Plaza de Acho in the Rimac district of Lima – the oldest in Latin America and the sec- ond oldest in the world, dating back to 1766. CLIMATE: In keeping with its diverse geography, theWhile there is no official religion, Catholicism is recognised as an important part of the country’s culture climate varies widely across Peru. The coastal plains religions. The constitution provides for freedom of and deserts in the west are relatively warm and arid, religious opinion and practice, which the govern- while the central mountainous highlands are much ment respects. The country has several important colder and the densely rainforested east is hot, humid religious events, such as the festival of Corpus Christi, and subject to heavy rain. Temperatures are gener- which is celebrated 60 days after Easter Sunday and ally pleasantly mild in Lima, though humidity levels involves statue-bearing processions. It is particular- can be high. The coldest month in Lima is August, ly popular in the south-eastern city of Cuzco. Major when the temperature varies between 13°C and cities such as Lima and Arequipa contain numerous 19°C. The capital is at its hottest during the summer well-maintained colonial-era Spanish churches. months, January to March, when the temperature LANGUAGE: The official languages are Spanish, peaks at 28° and seldom falls below 19°. which is spoken by around 84% of the population, The winter months of July to September see the and the Amerindian language Quecha, spoken by most rainfall in Lima, an average of 8 mm per day, around 13%. Quecha and other native American lan- while precipitation levels drop to close to zero guages, such as Aymara and Ashaninka, are prima- between December and April. The city is often rily used in the Andean highlands. English is widely enveloped by mist that comes from the sea, known used among the business community. as garúa, between April and November. Temperatures CULTURE & HERITAGE: Peruvian culture has strong are slightly lower but still mild in Arequipa, though Native American – specifically Incan – influences. its rainy season occurs between January and March. Around 45% of Peruvians are indigenous Amerindi- NATURAL RESOURCES: Peru is a minerals and met- ans and 37% are of mixed Amerindian and European als producer of global importance. In 2008 mining descent. The culture is defined by the fusion of and minerals represented around 7% of GDP, and indigenous traditions with European – predominant- almost 60% of exports, with total minerals exports ly Spanish – and African influences. worth around $18.7bn. About $20bn worth of invest- Peru boasts a wide range of arts and crafts, with ment is currently in the pipeline for the sector. In a thriving handicraft export industry. Traditional 2008 the country was the world’s largest producer products include wooden carvings, pottery, sculp- of silver, the third-largest global producer of cop- ture and jewellery, much of which is influenced by per, bismuth, tin and zinc, the fourth-largest produc- the country’s Incan heritage, featuring complex er of lead and molybdenum and the fifth-largest Amerindian geometric designs and patterns. Most global producer of gold. By value, its largest miner- Peruvians, especially younger people, wear West- al export in 2008 was copper, with exports at around ern-style clothing, and businesspeople are expect- $7.7bn, followed by gold, with exports around $5.6bn. ed to wear Western-style business suits. However, Peru is a net oil importer, with proven reserves of in rural areas many indigenous people such as Quecha around 470m barrels and production about 148,000 Peruvians wear traditional outfits or a mixture of barrels per day (bpd) in 2009, versus consumption indigenous and Western clothing. Traditional items of 157,000 bpd. Natural gas reserves stood at 334bn include the hand-woven poncho worn by men, knit- cu metres in 2009, ranking Peru 39th in the world, ted caps with ear flaps, known as chullo, and pollera, with annual production of around 3.4bn cu metres. multi-layered woollen skirts or petticoats. Its largest gas fields include the Aguaytia field in There are numerous traditional Peruvian dances. Ucayali, in the eastern rainforest region, and the The best-known is the courtship dance, the marinera, Camisea field in the south-eastern region of Cuzco. www.oxfordbusinessgroup.com/country/Peru
  4. 4. COUNTRY PROFILE OVERVIEW 13 Ollanta Humala was elected to the presidency in June 2011Steady progressThe past decade has brought a number of successful new policiesFollowing the fall of now-imprisoned former Presi- try. The coastal desert and Amazonian jungle regionsdent Alberto Fujimori from power at the turn of the are separated by the towering Andes mountain rangemillennium, Peru has enjoyed over a decade of sta- running from north to south through the centre ofble political and economic progress. Economic devel- the country. The extreme, yet diverse, terrain hasopment, in particular, has been rapid, partly due to allowed for the development of various customs,elevated global commodity prices, as well as the religions and languages over the years. Whereas thecommercialisation of the giant Camisea natural gas desert coastal region, partially marked by Europeanfield and the establishment of free trade agreements influences, is the most densely populated and devel-with a number of countries. oped area, the sparsely populated Amazonian jun- Successful economic policies have combined with gle, or selva, remains home to a wide array of tribalprudent fiscal spending, leading to a reduction of cultures. The mountainous sierra, home to vast min-external debt and the accumulation of internation- eral deposits as well as the native Quechua popula-al reserves – a significant accomplishment consid- tion, falls somewhere in between as a largely ruralering an environment blighted in recent years by a agrarian society. These geographic and societal dif-sovereign debt crisis on one side of the Atlantic and ferences play an important role in politics and cana sub-prime mortgage crisis on the other. at times impede political decisions at the national Peru is also active in a number of international level, as exemplified by the plethora of ongoingorganisations. It is a member of and host to the social conflicts throughout the country.Andean Community of Nations, and has also joined HISTORICAL BACKGROUND: Following nearly threethe Asia-Pacific Economic Cooperation (APEC) – a centuries of Spanish colonial rule, Peru gained itssign of its historically strong and ever-increasing ties independence in 1824, although it took another halfto Eastern nations such as China and Japan. century – until 1879 – for the European power toOBSTACLES AHEAD: The election of President Ollan- recognise Peru’s sovereignty. In the 50 years follow-ta Humala in June 2011 signified a slight political turn ing independence, the country was governed prima-to the left as economic development, though strong, rily by a ruling aristocracy that favoured the land-has lacked the dynamism to have an effect on all seg- owning bourgeoisie. By the mid-1920s governmentments of society, leaving some of the country’s low- policies reinforcing static social classes led to theer-income classes disenfranchised (see analysis). formation of nationalist and populist political move-The success of the extractive industries over the ments, perhaps most notably the creation of thepast decade has corresponded with increased social American Popular Revolutionary Alliance (APRA),conflict over mining and energy projects as rural also known as the Peruvian Aprista Party, by Víctorcommunities demand more tangible economic ben- Raúl Haya de la Torre in 1924.efits and environmental planning from the private APRA remains Peru’s most entrenched politicalsector and government. Other challenges, includ- party, with unwavering support from party loyalistsing corruption and the escalating domestic produc- from generation to generation. However, its ideolo- Economic changes over thetion of cocaine, also face the administration, as well gy has undergone an extensive evolution from its past decade, including the increased success ofas the continuing war against poverty. beginnings as a party heavily in favour of socialist extractive industries, haveDIVERSE DEMOCRACY: Peru comprises three vast- economic policies and agrarian reform to its current raised issues surroundingly differing regions that have over time shaped the status, which is slightly left-of-centre on the politi- social inequality andeconomic, political and social make-up of the coun- cal spectrum. Four years after the establishment of environmental problems. THE REPORT Peru 2012
  5. 5. 14 COUNTRY PROFILE OVERVIEW ly soaring inflation. This paved the way once more for APRA, which went on to win the 1985 election, with President Alan García inheriting a deteriorat- ing economic situation that worsened throughout the late 1980s. Hyperinflation saw the Peruvian sol replaced by the inti in 1985 – with the inti itself lat- er being replaced by the nuevo sol in 1991. A shrinking economy intensified already existing social tensions and the overall environment was fur- ther soured by increasing terrorist threats. The com- bination prompted the Peruvian electorate to choose a relatively unknown quantity in the 1990 elections when Alberto Fujimori emerged victorious. ADDRESSING ECONOMIC PRESSURES: The presi- dent’s reforms came to be known as “Fujishock”, and he was able to rein in the hyperinflation that was ravaging the economy. However, due to growing opposition to his leadership in Congress, Fujimori dis- solved the legislative body, revised the constitution and called for new congressional elections.The country has greatly broadened the scope of its political and economic relations over the past decade Having subdued his political opposition, FujimoriAlberto Fujimori came to APRA, the Peruvian Socialist Party was founded by continued to institute his economic reforms, whichpower in 1990 and José Carlos Mariátegui, while APRA also had a broad- saw the privatisation of numerous state-ownedlaunched a set of reforms er influence on the pan-Latin American populist enterprises and the creation of an investor-friend-known as “Fujishock”,which helped to stop movement known simply as “Aprismo”. ly business climate. He is also credited with subdu-inflation. However, Fujimori Haya de la Torre exerted considerable political ing rural terrorist organisations and insurgent groupsdissolved Congress and influence over the following 50 years as Peru’s dem- such as the Shining Path and the Túpac Amaru Rev-revised the constitution, ocratically elected governments continued to be olutionary Movement (MRTA), the latter of which tookimplementing an heavily controlled by the military and oligarchy, with over the Japanese Embassy in Lima in 1996, althoughauthoritarian regime thatlasted until 2000. ruling military juntas holding power on several occa- questions would later be raised over the conduct and sions. Although Haya de la Torre was twice elected practices of security forces deployed under intelli- to the presidency, he was prevented from taking gence chief Vladimiro Montesinos. office by the military, formerly APRA’s chief opposi- After winning an unconstitutional third term in tion. His second victory in 1962 against Fernando office at the turn of the millennium Fujimori was Belaúnde Terry and former President Manuel Odria, quickly mired in scandal a month later as allegations in which no candidate acquired the then-constitu- of bribery involving Montesinos emerged. Fujimori tionally mandatory one-third of the popular vote then called for new elections, which would be won necessary to take office, resulted in the installation the following year by leading opposition figure Ale- of a transitional military junta before new elections jandro Toledo. Although many still hail Fujimori for in 1963 handed Belaúnde the presidency. restoring economic stability to Peru, it was his admin- Belaúnde would himself eventually succumb to a istration’s authoritative rule and more specifically its military coup in 1968, resulting in more than a decade uncompromising crackdown on insurgent groups of direct military rule from 1968-80. In 1975 Gen- that would mar his time in office and eventually lead eral Francisco Morales Bermúdez replaced the rul- to his prosecution and imprisonment for crimes ing General Juan Velasco Alvarado, and he eventu- against humanity, bribery and embezzlement. Indeed, ally presided over the return to civilian government Fujimori still enjoys some level of support in Peru for in 1979 when Haya de la Torre, who would die that his successful economic policy and addressing the same year, led a newly formed Constitutional Assem- issue of terrorism, which to a small extent has been bly. Meanwhile, the intermittent military coups, a illustrated by the support his daughter received dur- politically entrenched oligarchy and inspiration from ing her presidential campaign in 2011. the Cuban Revolution (and various Latin American ELECTIONS: Following Fujimori’s brief third presi- offshoots) led to a rise of guerrilla warfare, terror- dential term, Congress sought to restrain presiden- ism and an internal strife within Peru that would tial authority and avert the potential of a future dic- eventually climax in the 1990s. tatorship by preventing incumbent presidents from FUJISHOCK & A RETURN TO DEMOCRACY: Presi- running for re-election for at least five years after their dent Belaúnde was again democratically elected term in office. Voting in elections in Peru is manda- during the May 1980 elections. However, his second tory for all citizens from the ages of 18 to 70, after term in office ended poorly due to a combination of which participation becomes optional. economic hardship prompted by an El-Niño-affect- The National Registry of Identification and Civil Sta- ed agriculture industry, rising rural insurgency from tus (RENIEC) is responsible for determining and track- movements such as the Shining Path and eventual- ing who must vote. The National Office of Electoral www.oxfordbusinessgroup.com/country/Peru
  6. 6. COUNTRY PROFILE OVERVIEW 15Processes (ONPE) organises and carries out elections,while the National Judiciary of Elections (JNE) super-vises the process to ensure the legality of both elec-tions and campaigns.PARTIES & ALLIANCES: The 2011 general electionssaw a number of significant changes to the make-up of Peru’s executive and legislative branches. Whilethere were more than a dozen candidates runningfor the presidency, five frontrunners emerged: LuisCastañeda (National Solidarity Alliance), Pedro PabloKuczynski (Alliance for Great Change), AlejandroToledo (Peru Possible), Keiko Fujimori (Force 2011)and Ollanta Humala (Peru Wins). Former President García was unable to run due tothe new regulations barring presidents from serv-ing two consecutive terms in Peru, although thatleft the door open for his predecessor, Toledo, to re-enter the fray. In fact, García’s party, APRA, did noteven field a candidate. Political parties in Peru are severely fragmented, The National Congress is a unicameral legislature made up of 130 representativesas evidenced by the steady emergence of new organ-isations all along the political spectrum and the fre- resigned on December 10th, 2011, following protests The president is elected toquent merging of parties to pool political capital against the country’s largest foreign investment a five-year term, along with the vice-president. The(see analysis). This is partly due to historical trends, project – the Minas Conga mine in Cajamarca. Under president is responsible forthough Fujimori’s strict regime also had a devastat- Peruvian law, if the prime minister steps down, so appointing a primeing effect on numerous parties. too must his cabinet – though many are likely to be minister, who helps to The lack of institutionalised political parties – reinstated in the subsequent reshuffle. Members choose the other memberswhich usually bring strong voter loyalty – often forces are not subject to individual approval from Congress, of the cabinet.candidates to run more personality driven cam- although the entire cabinet must be approvedpaigns. It also at times produces candidates of sim- through a congressional vote of confidence.ilar ideals running simultaneously, whereas elections Both the executive and legislative branch may pro-in two-party systems typically weed out such candi- pose laws, although the president must first obtaindates in the pre-election primaries. the approval of his cabinet. The president also must In the first round of voting in April 2011, Ollanta seek cabinet approval on any laws related to legisla-Humala took the largest share of votes, just as he tive and emergency decrees, for which he must alsodid in 2006 before he went on to lose the runoff elec- notify Congress. Finally, the president holds bothtion to García. Humala’s 31.7% was followed by Keiko general veto powers on approved legislation as wellFujimori’s 23.6% and the two went to a runoff elec- as the more specific line-item veto allowing for thetion in June, in which Humala defeated his opponent deletion of specific clauses in a proposed law.51.4% to 48.5%. Sworn in on July 28th, 2011 (Nation- LEGISLATIVE POWER: The Congress is a unicamer-al Independence Day), Humala became the third al legislative body made up of 130 representativespresident since the ouster of Fujimori. who, like the president, are elected to five-year terms.EXECUTIVE BRANCH: As president, Humala is the Eligible candidates for office must be Peruvian citi-head of the government as well as the head of state. zens of at least 25 years of age and are electedThe president is elected for a five-year term and may under a proportional representation system in whichserve more than once provided the periods are not congressional seats are assigned to political partiesconsecutive. The vice-president is also elected along- according to the proportion of votes acquired byside the president in the general election, and the each party. There is a wide variety of political par-current vice-president is Marisol Espinoza. In spite ties serving in the Congress, with six currently hold-of being in the presidential line of succession, the ing power (see analysis).vice-president serves no official capacity other than While the main function of the Congress is to passto stand in for the president in the case of death, bills into law, it is also responsible for ratifying treaties,illness, travel or any other related issues preventing authorising government loans and approving thethe head of state from performing his or her duties. federal budget (along with the Ministry of Economy The president appoints a prime minister, who advis- and the executive branch). It serves the importantes him on the choice for minister in the rest of the role of acting as a counter-balance to the executivecabinet. Oscar Valdés, former minister of the inte- branch. The Congress may request information withrior, is now the prime minister following a cabinet regard to acts carried out by the executive branch,reshuffle in December 2011 that saw Humala change and it also has the power to call ministers before the10 of the 19 appointments. Salomón Lerner, Humala’s entire Congress or any of its sub-committees andfirst prime minister and two-time campaign advisor, approve executive decrees issued by the president. THE REPORT Peru 2012
  7. 7. 16 COUNTRY PROFILE OVERVIEW stitutional Court, a seven-member judiciary body elected by Congress to five-year terms, is the last ele- ment of the judicial system, but only serves the pur- pose of interpreting and preserving the laws laid out in the constitution. LOCAL GOVERNMENT: Decentralisation of federal government authority is a continuing process in Peru, where political power has historically been concentrated in the capital of Lima. For much of its history the country’s primary administrative subdi- visions were known as departments, which changed in 2002 when Peru became subdivided into 25 admin- istrative regions – though many still refer to them by the former name. Three years later a referendum was held to fur- ther merge 15 of the 25 regions into five significant- ly larger regions, although voters opposed the move. Beneath the regions are the administrative subdivi- sions of provinces, of which there are a total of 195. Lastly, there are 1833 districts, the smallest admin-The Supreme Court has 16 members, who are appointed and ratified by a judiciary council istrative units in the country. There are 22 sub-committees within Congress, all Regional governments are made up of a regional of which focus on specific legal issues. These include council, composed of the regional president, vice- social, economic, environmental, foreign relations and president, secretary and council members, which security-related concerns. Congress is also divided number from a minimum of seven to a maximum of into parliamentary groups, which are generally 25. All members of the council are elected to terms formed along party lines, although alliances among of four years. Regional councils were integrated in fractured political parties are common and occur to 2007 through the establishment of the National obtain a majority group when possible. The president Assembly of Regional Governments, a significant of the Congress is currently Daniel Abugattás, a event in the ongoing decentralisation process. member of Humala’s Peru Wins party. The capital city of Lima, which is home to rough- Until the dissolution of Congress under Fujimori ly one-third of the entire population of the country, in 1992, the legislative branch was bicameral, with is the only province that does not belong to one of a Senate and a Chamber of Deputies, which consist- the 25 regions. However, prior to the alteration in ed of 60 and 180 delegates, respectively. The new 2002 it counted among the country’s departments. constitution designed and introduced by the Dem- It is currently governed by the Metropolitan Munic- ocratic Constitutional Congress in 1993 reduced the ipality of Lima (MML), which is headed by Mayor legislative branch to one chamber, although today’s Susana Villarán de la Puente. congress features an additional 10 seats. OUTLOOK: After a campaign filled with promises of THE JUDICIAL BRANCH: The judicial branch oper- social inclusion, the new administration has its work ates independently from the executive and legisla- cut out for it, though the early signs have been prom- tive authorities. It consists of a four-tier national ising. Indeed, the administration has made it known court system. At the top of the judicial branch sits it will seek to achieve its social goals without disrupt- the 16-member Supreme Court, which exercises ing Peru’s current economic model. jurisdiction over the entire nation. Nevertheless, numerous obstacles remain in the Judges serving on the Supreme Court are appoint- path of the administration’s social agenda, includ- ed and ratified when needed by the National Coun- ing the reform of some of the current ineffective cil of the Judiciary, a seven-member elected body social cash-transfer programmes and the creation which also appoints public prosecutors, as well as of new development-oriented programmes that can supervising appointed public officials and disciplin- provide the much needed training, finance and infra- ing them when appropriate. structure to assist micro- and small enterprises. Below the Supreme Court is the superior courts The early renegotiation of mining royalties (a sig- system, with each court presiding over defined judi- nificant campaign promise) was handled compe- cial districts. For the most part, these correspond tently, although the impact of the new law of prior with Peru’s 25 departments, although there are actu- consent has yet to become fully apparent. Further- ally 28 judicial districts. Beneath the superior courts more, the administration faces the delicate task ofThe Supreme Court is at are the trial courts, which are also referred to as resolving the scores of social conflicts around thethe top of the judicial courts of first instance. The trial courts oversee judi- country that could easily harm investor confidencebranch, followed by thesuperior courts, courts of cial issues at the provincial level. Finally, district or popular support. It seems that 2012 could be afirst instance and the courts known as courts of peace are responsible for difficult year for the administration, but for the mostcourts of peace. serving individual districts in the country. The Con- part Peru’s upward trajectory looks set to continue. www.oxfordbusinessgroup.com/country/Peru
  8. 8. COUNTRY PROFILE ANALYSIS 17 Higher royalties from mining firms will support poor communitiesSpreading the wealthSocial inclusion is playing a greater role in domestic policy-makingFollowing a campaign laden with promises of social modity prices could result in decreased royalties, shield- A number of initiativesinclusion, President Ollanta Humala’s administration ing the private sector from potential heavy losses. The have been set up to aid disadvantaged populations,has already begun fulfilling some of them. Having gained new royalty scheme is predicted to bring in an addi- including PRONAA, thelegislative approval to establish the Ministry of Devel- tional $450m a year, much of which will go toward national food assistanceopment and Social Inclusion only weeks after taking funding social programmes in areas where mining activ- programme, and Juntos, aoffice in August 2011, Humala turned his sights to ities are most fiercely opposed in the Andean highlands. national cash-transferrenegotiating royalties derived from the country’s main FACILITATING DEVELOPMENT: Humala appointed programme for families in extreme poverty.economic growth driver, the mining sector, to fund rural development expert Carolina Trivelli as the firstsocial programmes. An assortment of other reforms, minister of development and social inclusion, who willincluding a higher minimum wage, pension reform and be tasked with implementing the administration’s socialthe overhauling of various social programmes, have agenda. The ministry was created to centralise thealso been promoted during his first year in office. numerous social programmes, although Trivelli hasAN ENDURING CHALLENGE: Social inequality is a stressed the importance of linking short-term pover-major problem in Peru and recent economic growth has ty alleviation cash-transfer programmes with develop-failed to have a consistent positive impact across all social ment programmes designed to eliminate the conditionsclasses, leading to dissatisfaction among some of the preventing families and neighbourhoods from escap-lower-income segments. Nevertheless, overall pover- ing the poverty cycle. Programmes such as PRONAA,ty is in decline. According to the National Statistics the national food assistance programme, and Juntos,Institute, between 2005 and 2010 the percentage of a national cash-transfer programme for families inthe Peruvians living below the national poverty line fell extreme poverty, have already been placed under thefrom 48.7% to 31.3%. In view of such progress, the eco- ministry’s watch. In early 2012 the ministry launchednomic agenda of the current administration has for the an initiative providing support to 16,000 children inmost part continued the successful, business-friendly the poor rural areas of Ayacucho and Cajamarca.economic policies of previous administrations. INTERNATIONAL SUPPORT: The World Bank At the heart of the debate on economic development announced it had approved a $3bn loan to the Peru-and social inclusion is the mining sector, which has vian government to aid Humala’s anti-poverty initiatives.been the primary catalyst of recent economic success. The bank’s vice-president for Latin America, Pamela Cox,However it has also been the cause of protests and social said she hoped the Peruvian government would be asconflicts around the country, many of which have been successful in reducing poverty as the administration ofset off by public anger over the lack of economic ben- former Brazilian President Luiz Inácio Lula da Silva.efits trickling down to local towns and communities While many social programmes that rely on cashwhere most of the mining activity takes place. transfers will certainly increase the short-term liveli- Humala has set about renegotiating royalties paid by hood of low-income households, only economic devel-the mining industry. Despite initial fears that the indus- opment will raise their standard of living in the long term.try would be unjustly penalised, the administration Indeed, some of the administration’s loftier long-termsought private-sector involvement when hammering goals include the overhaul and expansion of universalout the details of the scheme (see Mining chapter). The access to public services, such as education and healthhigher royalties paid by mining companies to the gov- care, both of which are in need of reform and devel-ernment are calculated based on operating profits and, opment. If the administration can achieve these goals,as such, any significant cyclical decline in global com- it will bring enduring benefits to the Peruvian people. THE REPORT Peru 2012
  9. 9. 18 COUNTRY PROFILE INTERVIEW President Ollanta Moisés Humala Tasso Spreading prosperity OBG talks to President Ollanta Moisés Humala Tasso Investment in mining has increased since your elec- design and implementation of the social programmes tion. How will you maintain this upward trend? that help to generate the conditions for inclusion. This HUMALA: From the first day I assumed the presiden- will ensure that, above all, the poorest and most vul- cy, I have made it very clear that I will respect the com- nerable population groups can exercise their rights, mitments assumed by the country. apply their skills, and take advantage of the opportu- We in government are aware that the social inclu- nities they find in their environment. sion we offered to the Peruvian people during the elec- A set of goals has been defined, along with a follow- tion campaign must be sustained through economic up system to measure and evaluate the social policys growth, for which investment is fundamental. We there- effectiveness. Although MIDIS involvement should fore do not discourage investment, and nor will we result in a reduction in poverty indicators nationwide, stop keeping our promise of development with social the primary challenge is for these results to occur in inclusion. We are making our best effort, in all sectors, the most excluded homes and areas. For us, poverty to assure and sustain social harmony and political and has a face, name and age. It is living in remote, indige- economic stability in the country. nous and rural populations where the state did not go On this basis, when we took office we opened nego- for many years. In my government they are prioritised. tiations with the mining sector. In the process, I found Our country is growing, but we have inherited extreme evidence that many companies are quite clear on the poverty with very deep roots. We cannot continue idea of their social responsibility towards neighbour- growing while maintaining poverty. ing populations, and display a serious commitment to Our challenge is to make every effort to ensure that the environment. These are the modern companies we growth leads to wellbeing. For this reason, by the time wish to see in the country. This is the type of invest- I finish my term in 2016, we hope to have reduced ment we are looking for, and we are sure that it will aid extreme poverty from 36% to 19%, and to have raised in the development of the remote communities in which the number of homes that are receiving integrated they generally develop their projects. state services from 11.6% to 46%. We seek to assure harmonious coexistence between The education and health care of our children is a mining capital, investment and the working popula- constant concern, and by the end of our term we hope tions, through clear rules and responsible companies. to have increased school attendance among three- to As the state, we are also succeeding in establishing a five-year-olds from 60% to 78%, while reducing chron- presence that guarantees citizens’ rights, environmen- ic malnutrition of children aged under five from 23% tal respect, dialogue and the participation of compa- to 10%. But the most important thing is to work to nies, based on a modern, socially responsible outlook. reduce the care gaps in the rural populations where poverty is concentrated. We are focusing efforts there. How much of your policy to spread prosperity in the country can be achieved in five years? Do you believe that Peru would benefit in terms of HUMALA: In my government, this is a central, high-pri- continuity if presidents were allowed two consec- ority issue. To this end, we have created the Ministry of utive terms, as in the US? Development and Social Inclusion (Minsterio de Desar- HUMALA: Presidential re-election is a controversial rollo e Inclusión Social, MIDIS), which gives us a profes- issue here in Peru, as it is in other Latin American coun- sional team to coordinate and drive the social policy of tries. In North America, the realities are quite different, inclusion. This sector is in charge of, for example, the as are the perception of citizens living in those states. www.oxfordbusinessgroup.com/country/Peru
  10. 10. COUNTRY PROFILE INTERVIEW 19What is your strategy to reform education to devel- To this end, it is crucial that we have a consensual polit-op research and development? ical arena to strengthen democracy and contribute toHUMALA: A country’s wealth is also measured by its the peace, security and development of our regions.capacity for generating knowledge and exporting tech-nology. In Peru, we need to invest more in research and How will you strengthen political ties with Brazil toin the production of knowledge. At the moment, our become a trade platform between your neighboursinvestment is very low compared to the average in Lat- and Trans-Pacific economies?in America, even though we are one of the countries HUMALA: I think that Peru’s political links with itswith the highest economic growth rates in the region. neighbours, and Brazil in particular, are excellent. Peru My government believes the development of sci- and Brazil have a strategic partnership that commitsence, technology and innovation is fundamental to us to look towards the future together. One examplethree objectives: economic growth, environmental sus- of this is the presidential meetings planned as part oftainability and social equity. I aim for investment here the Bi-national Cabinet, the first of which is to focusto grow from 0.1% to 0.7% of our GDP by 2016. on the sectors linked to social inclusion. In addition, there Based on the proposals recently presented to the gov- is a willingness from both governments to make a num-ernment by the Consultative Commission for Science, ber of efforts to facilitate mutual trade and investment.Technology and Innovation, we will make an effort toimprove the quality of education and increase the num- How can inter-regional disputes over water andber of researchers and administrators to create, trans- other resources be resolved?fer, and adapt knowledge and technology. HUMALA: We feel that dialogue is the basis of con- As a sign of this drive, we have just started the Schol- flict prevention and resolution. Here, the Presidency ofarship 18 (Beca 18) programme, so that outstanding the Council of Ministers (Presidencia del Consejo de Min-youths with limited resources can study at the under- istros, PCM) plays an outstanding part, since it hasgraduate level and receive doctoral scholarships from political and technical means through its decentralisa-domestic and foreign universities. tion office. Its participation is also an important factor in the population feeling the presence of the state. TheIs economic strength in the Union of South Amer- PCM, through its conflict prevention office, providesican Nations (Unión de Naciones Suramericanas, training in averting and resolving conflicts to regionalUNASUR) possible without political integration? government officials, especially those which have directHUMALA: UNASURs path is different from that of the contact with the population and act as mediators. InEU, and is based on our peculiarities and experiences. 2008 the National Water Authority was created to serveEconomic might is not the objective that UNASUR is as the body overseeing the National Water Resourcepursuing. Our priority is integration that contributes to Management System. Its work is to promote the mul-the development of our settlements in areas such as ti-sectoral and sustainable usage of water resourcesinfrastructure, education, health care, energy, science from drainage basins. It also participates in the reso-and technology, and others. lution of water conflicts in conjunction with regional We do seek growth, but alongside the inclusion of government. It should be noted that, as part of a nation-large sectors of our population that have not benefit- al agreement, all social and political efforts are har-ted from the advances of our countries. In this way, sta- monised on the states water management policy. Thisbility is generated, which contributes to development. promises also to be a highly important development. THE REPORT Peru 2012
  11. 11. 20 COUNTRY PROFILE INTERVIEW Juan Manuel Santos, President of Colombia Regional integration OBG talks to Juan Manuel Santos, President of Colombia What measures are you taking to attract investors? This will encourage Colombian entrepreneurs and busi- SANTOS: Economic, political and social stability are nesses to strengthen exports even more. At the same key factors in determining the investment climate. Clear time, local industries will benefit from the gradual elim- legislation with stable regulations is equally important. ination of import tariffs on raw materials and inputs, Developing a favourable investment climate has been as well as machinery and high-tech equipment, thus one of the most important public policy goals in Colom- enabling them to become increasingly efficient and bia over the last decade, and has been carried out by competitive in their production processes. implementing tax incentives for investment, reducing paperwork, simplifying formalities, undertaking pro- What are your expectations of the FTA between motional activities and increasing security for investors. Colombia, Peru and the EU? Thanks to this comprehensive approach, Colombia went SANTOS: The agreement will ensure stability, trans- from receiving $2.1bn in foreign direct investment in parency and certainty of access for our exports to a 2002 to more than $15bn in 2011. market of nearly 500m people, the biggest importer Colombia offers investors a robust network of inter- of goods and services in the world, with a per capita national investment treaties that provide a favourable, income exceeding $32,000. Additionally, on public pro- fair and stable framework for foreign investment. curement matters, Colombian businesses will have access to all European bodies at the central and sub- How does Colombia expect to position itself in central levels, as well as to independent companies South America over the next few years? and entities of the 27 member countries of the EU. SANTOS: Colombia’s economy has its own specific The potential is enormous and we are encouraging gravity, not only because of its strategic location, but our businessmen and businesswomen to set their sights because the size of its market, its resource endow- on this huge market with high purchasing power, and ment, productive structure and pro-globalisation atti- to focus on producing and selling goods and services tude. In this context, Colombia expects to position itself with high demand levels in the European market. as a leader in regional integration, embracing surround- ing nations regardless of their size. It is crucial to take Will stronger ties with Peru make both economies advantage of our FTAs and to increase intra-industry more resilient to external financial shocks? trade as a way of advancing towards a higher-value- SANTOS: It is difficult for any economy to be fully added production. By negotiating flexible rules of ori- resilient to external financial shocks, and their levels gin, we have opened the door to productive alliances of resilience obviously depends on the degree of each between companies from different countries to direct country’s exposure to “contaminated” securities. For regional products to foreign markets. example, in the 2008-09 economic crisis, damage depended on the volume of sub-prime mortgages or In what ways will free trade agreements (FTAs) their derivatives held by institutional investors such as change the basis of the Colombian economy? pension funds and banks. In the current case it would SANTOS: We anticipate additional GDP growth through depend on the volume of sovereign bonds from the FTAs of 0.46%, along with an increase in exports of economies facing the greatest problems being held by more than 0.7%. Through these agreements, we have the respective financial entities in Peru and Colombia. gained greater access to service areas of interest for In both cases, however, the current exposure is mini- Colombia, such as consulting services and call centres. mal, and a shock via financial channels seems unlikely. www.oxfordbusinessgroup.com/country/Peru
  12. 12. COUNTRY PROFILE INTERVIEW 21 The greatest risk our economies currently face is based economy, showing our commitment by allocat-linked to foreign trade. Despite the fact that we have ing 10% of royalties generated by the mining and oildiversified our foreign markets, the US and the EU are sectors towards encouraging innovative ideas.still very important trade partners for Peru and Colom- The new national royalty system created the Science,bia. In this case, the resilience of our economies lies in Technology and Innovation Fund, which will have at itsthe foundations supporting our economic growth, and disposal approximately $350m in 2012, and whose pur-on having healthy macroeconomic policies. Peru and pose is to boost Colombia’s scientific, technological,Colombia have shown strong macroeconomic perform- innovative and competitive capabilities. Furthermore,ances and our foundations are solid. Both economies tax benefits have been put in place for educationalhave inflation under control, public finances are on the institutions and research centres, and for investmentsright path and foreign trade has strengthened. In this in technological research and development. In 2011,context, the deepening of the integration and the a total of 175 projects were approved under this pro-strengthening of bilateral relationships should help in gramme, amounting to more than $120m.the mitigation of foreign impacts. Project financing through private capital funds helps prioritise innovative ventures with high growth poten-Which sectors possess the greatest potential to tial, featuring higher-value-added products or servic-develop downstream industries? es. Those funds have at their disposal aggregate fund-SANTOS: There are five “macro” sectors we have iden- ing resources that amount to nearly $2.2bn.tified as “locomotives” or driving forces for growth andjob creation in Colombia. They are: innovation-based What regulatory and infrastructural improvementssectors; agriculture, livestock and rural development; are necessary to further increase cooperationtransport infrastructure; mining development and pow- between Colombia and Peru?er generation expansion; and housing construction. SANTOS: We have been working with Peru on three Thanks to joint cooperation between the public and fronts: cooperation, regulation and infrastructure toprivate sectors, we created a Productive Transforma- take advantage of our free trade agreements. We sharetion Programme (PTP), which has been recognised best practices and information for negotiations withinternationally as an example of an innovative way to third countries. Additionally, we have cooperated intransform strategic, new and consolidated sectors into trade facilitation mechanisms such as the one-stoptop global market players based on the linkage of pro- foreign trade window/counter and the joint leverag-ductive chains and contribute to Colombia’s competi- ing of cooperation resources from the EU.tiveness. Among the 16 sectors included in the PTP are Regarding infrastructure, we are anticipating jointinformation technology, eco-tourism, horticulture, dairy, efforts on border projects, such as the navigability ofpower generation, and oils and bio-fuels. the Amazon River and bi-national transport connec- tions, as well as on an electricity interconnection proj-What is happening to produce more value-added ect also involving Ecuador and Chile. On regulatorygoods and to promote research and development? matters, in the Andean Community and the PacificSANTOS: The purpose behind PTP is precisely to encour- Alliance initiative – of which Colombia and Peru are partage the production of more value-added goods and – we have been working together on policy coordina-innovative services where our country has shown proven tion, institutional adjustments, sanitary measures andstrengths. We plan to move towards an innovation- the regulation of trade in services and investments. THE REPORT Peru 2012
  13. 13. 22 COUNTRY PROFILE INTERVIEW Rafael Roncagliolo, Minister of Foreign Affairs A stronger voice OBG talks to Rafael Roncagliolo, Minister of Foreign Affairs What steps have been taken to develop the goal of strategies to confront the global crisis and we have edu- a multilateral foreign policy? cation and health councils. We have also integrated road RONCAGLIOLO: This is an important moment for Lat- infrastructure, which is crucial, as it connects north in America. This is evident when you see how the glob- and south, Atlantic and Pacific. This is very important al economic crisis is affecting the world. Although we, for developing the region. We are planning a petrochem- too, are feeling the effects, we are in a better position icals pole in the south of Peru, which could be connect- to resist them. So it’s time not only for national devel- ed to Bolivia, Brazil and even the River Plate basin. opment but for regional development and integration. President Ollanta Humala expressed this interest for In what way will foreign policy help achieve social joint action to other leaders on his South American tour transformation and poverty reduction? before taking the presidential oath. The Union of South RONCAGLIOLO: Foreign policy and internal policy are American Nations (Unión de Naciones Suramericanas, not separate things. President Humala has defined two UNASUR) and the Andean Community (Comunidad focus points: economic growth and social inclusion. Andina, CAN) organised summits on the day of the Our foreign policy is in line with these. Promoting growth president’s inauguration in which social inclusion was includes diversifying economic relations, continued underlined. We helped create the Community of Latin participation in the Asia-Pacific Economic Cooperation American and Caribbean States and we will assume the forum, which links us to the US and Asian countries, presidency of UNASUR in the last quarter of 2012. We and free trade agreements with the EU. We also want are also restructuring CAN. The 40-year-old goals of cre- these to have a positive effect on social inclusion. That’s ating a Customs union and a common market cannot why regional trade is so important – it helps small and be achieved today. However, CAN is very important as medium-sized companies conquer new markets. a free trade area because trade between Andean coun- Social inclusion also relates to the 10% of our citi- tries has a high degree of added value and includes par- zens living abroad. Their impact on the economy is ticipation by small and medium-sized enterprises. huge, since their remittances are five times bigger than I have travelled to every South American country to the amount we receive through international cooper- amplify existing trade agreements, joint investments ation. We need to defend Peruvian expats since they and regional trade – which represents less than 20% face hostility and human rights abuses in some coun- of all trade, but remains our best protection in the face tries. We are currently signing agreements inside CAN of a global crisis. We negotiated a trade agreement with and Mercosur to regularise their status. We are work- Venezuela and we are trying to improve trade terms ing towards similar agreements with other countries. with protectionist countries. In addition, we are form- The contribution Peruvians living abroad make to ing the Pacific Alliance with Mexico, Colombia and Chile. the economies of foreign countries is significant. We are trying to develop international mechanisms so for- How will UNASUR gain a stronger voice in the world? eign investment and international cooperation schemes RONCAGLIOLO: The idea of Latin American integra- serve social inclusion. Even though exporting primary tion is 200 years old and, today, UNASUR is its most goods is important, it will not automatically produce dynamic manifestation. We have a Joint Security and development. We need to change our economic matrix. Defence Council, which is very significant, considering Our bilateral-agreements will bring in technology and previous agreements failed in the Malvinas War. We ini- get scholarships for Peruvians so they gain advanced tiated the council of ministers of economy to plan training, helping improve their employment options. www.oxfordbusinessgroup.com/country/Peru
  14. 14. COUNTRY PROFILE ANALYSIS 23 In 2011 China overtook the US to become Peru’s top trading partnerA successful partnershipPolitical and economic ties with China are stronger than everThe 40th anniversary of the establishment of for- met with Peruvian Vice-President Marisol Espinoza China purchased $6.95bnmal relations between the governments of China in Lima in September 2011. worth of goods from Peru in 2011, and Chineseand Peru was marked in 2012, underlining a long- MILITARY TIES: Meanwhile, a Chinese military del- investments in the comingstanding relationship that has become increasingly egation, led by China’s vice-chairman of the Central five years are predicted toimportant as time has gone on. In recent years bilat- Military Commission, General Guo Boxiong, paid a vis- reach $10bn.eral relations have grown significantly. Trade between it to Lima in November 2011, along with a memberthe two countries has increased sharply in recent of the Central Politburo of the Communist Party andyears, particularly since the signing of a free trade other high-ranking military officials. While in Limaagreement (FTA) in 2009. Two-way trade reached an they met with Peru’s former defence minister, Danielall-time high in 2011, when China overtook the US Mora Zevallos, to sign two military cooperation agree-to become Peru’s largest trading partner. Much of ments. This was the second such meeting in 2011,this is due to the country’s vast mineral wealth, as the first occurring in May when Jaime Thorne, thewell as its position on the western coast of South former Peruvian defence minister, travelled to Chi-America, both of which have attracted numerous na to meet Xu Caihou, vice-chairman of Chinas Cen-Chinese companies hungry for raw materials and tral Military Commission, as well as Liang Guanglie,access to growing Latin American markets. the Chinese defence minister. As one of just three Latin American countries to Although political and military ties are strong andjoin the Asia Pacific Economic Cooperation (APEC) continue to expand, they are overshadowed by theforum – the other two being Chile and Mexico – Peru economic integration between the two countries.has been positioning itself to become a centre for China purchased $6.95bn worth of Peruvian goodstrade between Latin America and Asia. Public and in 2011, mostly minerals and fishmeal. Moreover,private investments to upgrade coastal ports and Chinese investments are predicted to total as muchinland transport corridors have been made with an as $10bn over the next five years, all of which is parteye to increase trade (see Transport chapter). of China’s larger scheme to place an estimated 60%INCREASED CONTACT: On the sidelines of the APEC of foreign investments in Latin America by 2020,Conference in November 2011 in Hawaii, President according to the Peru-China Chamber of Commerce.Ollanta Humala met with his Chinese counterpart Hu 40 YEARS: Celebrations of the 40th anniversary ofJintao to discuss how to further deepen the relation- diplomatic relations took place both in Lima andship between the two nations. Both leaders called Shanghai on November 2 of 2011. The Chinesefor the continued strengthening of political con- ambassador celebrated with former Peruvian Foreigntact, the deepening of economic cooperation, and Minister José Antonio Meier, while their counter-trade and closer cultural exchanges, while Humala parts met for a similar exchange in Beijing.reaffirmed Peru’s support of the “One-China” poli- Although trade may gain the most attention, oth-cy. Hu previously visited Peru in 2008, and former er aspects of bilateral relations, such as frequent mil-Peruvian President Alan García also took a trip to Chi- itary exchanges, are also important. Lima has onena during his term. President Humala is likely to make of the continent’s largest Chinatowns, known as thean official trip to China in 2012. Barrio Chino de Lima – an important area for Chi- Numerous other official meetings between the nese culture in the country. With investment andtwo governments have also taken place at lower lev- trade expected to keep growing, it appears likelyels. For example, Chinese Vice-Premier Hui Liangyu that China-Peru relations will continue to deepen. THE REPORT Peru 2012
  15. 15. 24 COUNTRY PROFILE ANALYSIS The 2011 election involved a number of parties and alliances Party lines A look at the major players in a fragmented political scene Much of the last decade In 1990 the Peruvian electorate veered away from well- isations in Peru. After succeeding in replacing Albertohas been dedicated to established political parties and instead chose the rel- Fujimori in 2000, the PP pulled its candidate out of therestoring democratic atively unknown Alberto Fujimori, campaigning under 2006 elections before Toledo decided to run for a sec-institutions, includingpolitical parties following the banner of his newly formed Cambio 90, to be pres- ond presidential term in 2011 (the Peruvian constitu-the authoritarian regime of ident. Now, more than a decade after democracy has tion prevents consecutive presidential terms). ToledoAlberto Fujimori. been restored following the fall of Fujimori’s authori- finished the election in fourth place, having won 15.6% tarian regime, they are still in the process of rebuild- of the votes. However, PP came third in congressional ing. Progress has been slow and inconsistent, with major elections, winning 21 seats. political parties having varied degrees of success. The ALLIANCE FOR GREAT CHANGE: The Alliance for Great fractured nature of the party system has encouraged Change (PPK) was also formed for the 2011 general the establishment of coalitions and alliances for elec- election to prop up non-partisan presidential candidate tions, and of parliamentary majorities once in power. Pedro Pablo Kuczynski. The PPK gained support from PERU WINS: Peru Wins, the party of President Ollanta the Christian People’s Party, the Alliance for Progress, Humala, falls on the left side of the political spectrum. the National Restoration Party and the Peruvian Human- It was formed specifically for the 2011 election as a ist Party. In the congressional elections the PPK won coalition of various parties, including the Peruvian 12 seats, with 14.4% of the popular vote, and one seat Nationalist Party and nationalist members of the Union in the Andean Parliament, while Kuczynski won 18.5% for Peru party who had united behind Humala in the of the presidential vote. 2006 elections. The Socialist Party, Peruvian Commu- NATIONAL SOLIDARITY ALLIANCE: Also formed for nist Party and Revolutionary Socialist Party also joined. the 2011 general election, the National Solidarity Aside from winning the 2011 presidential runoff Alliance is led by former presidential candidate and election, Peru Wins was successful in Congress as well, former Mayor of Lima Luis Castañeda. Parties in the winning 25.3% of the popular vote and 47 of 130 con- coalition include the eponymous National Solidarity gressional seats – the largest share among the parties. Party, some of the core members of the Union for Peru, The party has formed a majority coalition with the Peru Cambio 90 (a successor to Fujimori’s former party), Possible (PP) Alliance, the centrist group of former Always Together and Everyone for Peru. The alliance President Alejandro Toledo. It also won 27% of the vote won 10.2% of the vote in the 2011 congressional elec- in the election of Peru’s five members of the Andean tion, giving it nine seats. Castañeda’s presidential cam- Parliament, handing the party two representatives. paign began quite brightly, but he slid into fifth place, FORCE 2011: Led by Keiko Fujimori, daughter of the with 9.8% of the votes in the general election. controversial former president, Force 2011 is consid- APRA-PERUVIAN APRISTA PARTY: The American ered a right-wing conservative organisation. Formed for Popular Revolutionary Alliance (APRA) is Peru’s oldest the general election, the party and its presidential can- and traditionally most institutionalised political party. didate received 23.6% of the votes in the general elec- Founded in 1924 by political activist and lawyer Víctor tion before losing in the presidential runoff with 48.7% Raúl Haya de la Torre, APRA is the party of former two- of the vote. The party also finished second in the con- term President Alan García. Mercedes Rosalba Aráoz gressional elections, picking up 37 seats in the Con- Fernández, the party’s candidate in the 2011 presi- gress and one seat in the Andean Parliament. dential elections, withdrew her candidacy amid a con- PERU POSSIBLE: Founded by former President Tole- gressional corruption scandal involving members of do in 1994, PP is one of many centrist political organ- the party. APRA won four congressional seats in 2011. www.oxfordbusinessgroup.com/country/Peru

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