Peru is a country with rich natural resources but a history of instability that has stymied the country's ability to use these resources for the benefit of the general population. As a result, much of the population - nearly 52 percent - lives in poverty. Leadership changes in the past decade, however, have resulted in positive strides in several areas.
Despite political and economic challenges, the government has set a positive course to solve Peru's economic and social problems. With privatization of major industries since the 1990s, continued austerity programs and lower inflation, the country has made progress. Although businesses were discouraged by the period of political instability, withdrawal of some tax benefits for foreign investors, and a jump in the budget deficit, the above-mentioned progress has led an increasing number of foreign companies to invest in Peru. Numerous sectors of industry - including telecommunications, railroads and energy - are open to foreign corporations.
In the early 2000's, Peru's export trade greatly increased, totalling over US$17 billion by 2005. Expectations for 2006 are for increases of about 35 percent over that amount by the end of the year.
In 1991, Peruvians experienced only the second transfer of office between two elected heads of government in 45 years. Alberto Fujimori, known as el chino because of his Asian ancestry, was elected president. He immediately took steps to open Peru to increased foreign investment by reducing tariffs and other trade barriers, called for the privatization of state-owned businesses and industries, and took measures to reduce the rampant inflation left by his predecessor.
When faced with opposition to his reforms from a recalcitrant congress, Fujimori shut down the congress and the courts until he could revise the constitution to significantly strengthen the presidency. The result was Peru's current constitution, passed on December 31, 1993.
Under this constitution, the president is elected for a five-year term. He is permitted to make military promotions and ambassadorial appointments without the approval of congress. Peru's congress is a unicameral legislature with 120 members who are elected to five-year terms by popular vote. The president is both the chief of state and the head of government.
Charges of electoral abuse and fraud were leveled at President Fuijmori, when he ran successfully for a third term in the spring of 2000. His opponent, Alejandro Toledo, questioned the validity of the election, and ultimately forced the scheduling of a new election in April 2001.
In November 2000, Fujimori resigned and fled Peru to Japan. Valentin Pariagua, leader of the legislature, was sworn in as interim president, until a run-off election on June 3, 2001 resulted in Alejandro Toledo's electtion as president. The April 9, 2006 election resulted in a near-three-way tie, with results too close to determine a clear winner. A run-off election on June 4 resulted in Alan Garcia's election.
Other issues that concern the government include the presence of two major terrorist groups, the Tupac Amaru Revolutionary Movement and the Sendero Luminoso - or Shining Path. Fortunately, terrorism has declined significantly after the arrest of the Shining Path's leader, Guzmán, however, as a continuing world issue, terrorism remains an ongoing threat to Peru's stability.
In addition, the cultivation of coca leaf, which was traditionally used by the Indian population for brewing tea and for chewing, has found its way into the production of cocaine for export. Government programs are in place to encourage farmers to cultivate other crops in place of coca, but it can be hard to convince them to give up such a lucrative business.