Peru’s transformation over the past two decades represents a remarkable success story, though significant challenges and risks remain. Peru has emerged as a strong, stable player in South America and a vital ally to the United States in a region where the growing corruption scandals and the crisis in Venezuela have created new foreign policy challenges. Since emerging in 2001 from a long battle against domestic terrorism and a decade of authoritarian rule, Peru has seen five peaceful democratic transitions. Poverty has fallen by over half nationally, to nearly 20 percent today. Trade with the U.S. has more than doubled under the U.S.-Peru Trade Promotion Agreement, which entered into force in 2009. Peru is a rising leader on regional and global issues, assuming significant roles in regional and international organizations.
CHALLENGES
Nonetheless, even as Peru emerges economically and politically, progress has masked persistent structural challenges, as evidenced by the harsh impact of the Covid-19 pandemic. Peru is one of the hardest hit countries globally, both on the economic and health fronts. Beyond the need of surmounting the economic recession, Peru is at risk of the “middle income trap,” where weak and inefficient state institutions fail to provide the environment for continued economic growth and threaten to undermine the gains of the last decades. Corruption has eroded citizens’ confidence in democracy, and affected the country’s political stability. Transnational criminal organizations also operate in Peru, jeopardizing legal commerce and devastating communities through illegal trafficking of people and illicit goods. These problems are most acute in Peru’s ungoverned spaces, especially in poor, rural, remote regions of the Amazon Basin. Curtailing these multi-billion dollar illegal industries is now one of the most important U.S. foreign policy goals in Peru.
APPROACH
After 59 years in Peru, USAID has evolved from providing assistance for basic service delivery and economic growth, to supporting a strategic partnership that advances shared U.S. and Peruvian interests. USAID’s programs strengthen Peruvian institutions to: 1) promote licit livelihoods in coca-growing areas through alternative rural development; 2) improve sustainable natural resource management and capacity to fight environmental crimes; and 3) strengthen governance to reduce corruption and improve the effectiveness of public investment. These efforts are aligned with U.S. national security and foreign policy goals to promote security and rule of law in the Americas and sustain strong economic growth and trade.
Promote licit livelihoods in coca-growing regions
USAID is helping the GOP advance its National Counter-Drug Strategy by supporting alternatives to coca cultivation and strengthening its capacity to confront drug cartels. The GOP negotiates with communities to give up coca and join the licit economy. USAID then helps farmers to plant cacao and coffee and connects them to farmer producer associations. Producers associations ensure that farmers are linked to markets, allowing farmers to draw higher prices for their crops. These efforts have made the rural economy more dynamic in targeted areas and sparked an uptick in private investment in these isolated regions. USAID has signed agreements to leverage more than $70 million in private sector investment in rural regions. This successful model has lifted thousands of rural Peruvian families out of poverty and enabled them to move away from coca cultivation. Over the last five years, families participating in USAID programs have seen their incomes increase by 53 percent; in USAID target regions, extreme poverty dropped from 55 to 30 percent.
Improve sustainable resource management
Alluvial gold mining devastates Peru’s Amazon communities, forests and water supplies. Illegal logging is deforesting the Amazon, fueling transnational crime and undercutting international timber markets. USAID works with the GOP, local communities, Peruvian research organizations, and U.S. universities to help address these critical threats to the Amazon. Efforts focus on helping communities resolve social conflicts, promote sustainable economic development, and rehabilitate deforested and degraded land. Programs also focus on helping communities implement measures to improve water security, which is under increasing pressure due to climate variability. In 2017, USAID support enabled Peru’s National Forestry Wildlife System to launch a new electronic timber tracking and control system to monitor Peru’s timber supply chain in real-time and detect and stop illegal timber shipments.
Strengthen governance to reduce corruption
Effective government institutions that represent the interests of all citizens are essential for economic growth and prosperity. Throughout Peru, and especially in remote rural areas, government organizations often lack the capacity and resources to be effective. High levels of corruption further limit the government’s ability to fulfill its mandate and undermines public confidence in democracy itself. To address these issues, USAID has partnered with the Government of Peru, local and regional governments, and civil society to improve the quality of public services, prevent corruption and promote transparent governance. Initiatives include tackling illicit money in campaign finance, supporting citizen oversight mechanisms for major infrastructure projects and combating trafficking in persons. USAID works with GOP institutions to improve the integrity and quality of public procurement and to promote transparency in the management of public funds. USAID also supports the GOP’s efforts to join the Organization for Economic Cooperation and Development (OECD).
Resources to reduce and mitigate the effects of COVID-19 in Peru
Independent of the strategic approach explained above, in the last year, the U.S. Government has allocated over $30 million to assist Peru in its emergency response to COVID-19. This assistance has been provided by USAID/Peru, USAID’s Bureau for Humanitarian Assistance, the Department of Defense Humanitarian Assistance Program, and the Department of State’s Bureaus for Bureaus for Population, Refugees, and Migration (PRM) and International Narcotics and Law Enforcement Affairs (INL). Assistance has included support for: disease surveillance, testing, case management, contact tracing, mental health services, oxygen, ventilators, field hospitals, personal protection equipment (PPE), government procurement of medical supplies, economic reactivation, and cash assistance for vulnerable populations, including Venezuelan migrants.
South America Regional programs
USAID’s bilateral program in Peru is complemented by two South America Regional programs: Support for Venezuelan Migrants and the Amazon Regional Environment Program.
Venezuelan Migration Regional program
USAID seeks to improve the socio-economic integration of Venezuelan migrants and refugees in targeted cities of Peru, Ecuador and Brazil. This is accomplished through a mix of activities focused on enabling Venezuelans to secure a sustainable livelihood in their host country. Major lines of activity include: improved access to financial services, particularly savings and credit products; facilitating access to the labor market through training, job placement support and outreach to the private sector; and, training and support for small business owners and aspiring entrepreneurs, including access to seed capital. Primary measures of success include increased incomes, secure and decent employment opportunities, and financial inclusion.
Amazon Regional Environment Program
As the Amazon region’s fourth largest conservation donor, USAID plays an important role collaborating with the governments of the region, global and local environmental organizations, civil society groups, and corporations.
The vision of a healthy Amazon depends on achieving four goals: 1) decreasing deforestation, forest degradation, and greenhouse gas emissions; 2) fostering an environmentally friendly economy; 3) protecting key landscapes and species; and, 4) securing the rights, resources and health of forest-dependent communities.
To achieve this vision, USAID promotes sustainable natural forest management, including the creation and improved management of protected areas and indigenous territories. We also help strengthen local, national and cross-border governance systems to support conservation and sustainable development, combat conservation crime, and to generate the scientific evidence base needed to understand and address environmental challenges.
To reduce threats to the Amazon’s forests, waters, and peoples, USAID’s Amazon Regional Environment Program (AREP) implements activities across Brazil, Colombia, Ecuador, Guyana, Peru, and Suriname to complement bilateral work in these countries.
Find out more about USAID in the following here.