Steady progress: The past decade has brought a number of successful new policies

Following the fall of now-imprisoned former President Alberto Fujimori from power at the turn of the millennium, Peru has enjoyed over a decade of stable political and economic progress. Economic development, in particular, has been rapid, partly due to elevated global commodity prices, as well as the commercialisation of the giant Camisea natural gas field and the establishment of free trade agreements with a number of countries.

Successful economic policies have combined with prudent fiscal spending, leading to a reduction of external debt and the accumulation of international reserves – a significant accomplishment considering an environment blighted in recent years by a sovereign debt crisis on one side of the Atlantic and a sub-prime mortgage crisis on the other.

Peru is also active in a number of international organisations. It is a member of and host to the Andean Community of Nations, and has also joined the Asia-Pacific Economic Cooperation (APEC) – a sign of its historically strong and ever-increasing ties to Eastern nations such as China and Japan.

OBSTACLES AHEAD: The election of President Ollanta Humala in June 2011 signified a slight political turn to the left as economic development, though strong, has lacked the dynamism to have an effect on all segments of society, leaving some of the country’s lower-income classes disenfranchised (see analysis). The success of the extractive industries over the past decade has corresponded with increased social conflict over mining and energy projects as rural communities demand more tangible economic benefits and environmental planning from the private sector and government. Other challenges, including corruption and the escalating domestic production of cocaine, also face the administration, as well as the continuing war against poverty.

DIVERSE DEMOCRACY: Peru comprises three vastly differing regions that have over time shaped the economic, political and social make-up of the country. The coastal desert and Amazonian jungle regions are separated by the towering Andes mountain range running from north to south through the centre of the country. The extreme, yet diverse, terrain has allowed for the development of various customs, religions and languages over the years. Whereas the desert coastal region, partially marked by European influences, is the most densely populated and developed area, the sparsely populated Amazonian jungle, or selva, remains home to a wide array of tribal cultures. The mountainous sierra, home to vast mineral deposits as well as the native Quechua population, falls somewhere in between as a largely rural agrarian society. These geographic and societal differences play an important role in politics and can at times impede political decisions at the national level, as exemplified by the plethora of ongoing social conflicts throughout the country.

HISTORICAL BACKGROUND: Following nearly three centuries of Spanish colonial rule, Peru gained its independence in 1824, although it took another half century – until 1879 – for the European power to recognise Peru’s sovereignty. In the 50 years following independence, the country was governed primarily by a ruling aristocracy that favoured the landowning bourgeoisie. By the mid-1920s government policies reinforcing static social classes led to the formation of nationalist and populist political movements, perhaps most notably the creation of the American Popular Revolutionary Alliance (APRA), also known as the Peruvian Aprista Party, by Víctor Raúl Haya de la Torre in 1924.

APRA remains Peru’s most entrenched political party, with unwavering support from party loyalists from generation to generation. However, its ideology has undergone an extensive evolution from its beginnings as a party heavily in favour of socialist economic policies and agrarian reform to its current status, which is slightly left-of-centre on the political spectrum. Four years after the establishment of APRA, the Peruvian Socialist Party was founded by José Carlos Mariátegui, while APRA also had a broader influence on the pan-Latin American populist movement known simply as “Aprismo”.

Haya de la Torre exerted considerable political influence over the following 50 years as Peru’s democratically elected governments continued to be heavily controlled by the military and oligarchy, with ruling military juntas holding power on several occasions. Although Haya de la Torre was twice elected to the presidency, he was prevented from taking office by the military, formerly APRA’s chief opposition. His second victory in 1962 against Fernando Belaúnde Terry and former President Manuel Odria, in which no candidate acquired the then-constitutionally mandatory one-third of the popular vote necessary to take office, resulted in the installation of a transitional military junta before new elections in 1963 handed Belaúnde the presidency.

Belaúnde would himself eventually succumb to a military coup in 1968, resulting in more than a decade of direct military rule from 1968-80. In 1975 General Francisco Morales Bermúdez replaced the ruling General Juan Velasco Alvarado, and he eventually presided over the return to civilian government in 1979 when Haya de la Torre, who would die that same year, led a newly formed Constitutional Assembly. Meanwhile, the intermittent military coups, a politically entrenched oligarchy and inspiration from the Cuban Revolution (and various Latin American offshoots) led to a rise of guerrilla warfare, terrorism and an internal strife within Peru that would eventually climax in the 1990s.

FUJISHOCK & A RETURN TO DEMOCRACY: President Belaúnde was again democratically elected during the May 1980 elections. However, his second term in office ended poorly due to a combination of economic hardship prompted by an El-Niño-affected agriculture industry, rising rural insurgency from movements such as the Shining Path and eventually soaring inflation. This paved the way once more for APRA, which went on to win the 1985 election, with President Alan García inheriting a deteriorating economic situation that worsened throughout the late 1980s. Hyperinflation saw the Peruvian sol replaced by the inti in 1985 – with the inti itself later being replaced by the nuevo sol in 1991.

A shrinking economy intensified already existing social tensions and the overall environment was further soured by increasing terrorist threats. The combination prompted the Peruvian electorate to choose a relatively unknown quantity in the 1990 elections when Alberto Fujimori emerged victorious.

ADDRESSING ECONOMIC PRESSURES: The president’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 dissolved the legislative body, revised the constitution and called for new congressional elections.

Having subdued his political opposition, Fujimori continued to institute his economic reforms, which saw the privatisation of numerous state-owned enterprises and the creation of an investor-friendly business climate. He is also credited with subduing rural terrorist organisations and insurgent groups such as the Shining Path and the Túpac Amaru Revolutionary Movement (MRTA), the latter of which took over the Japanese Embassy in Lima in 1996, although questions would later be raised over the conduct and practices of security forces deployed under intelligence chief Vladimiro Montesinos.

After winning an unconstitutional third term in office at the turn of the millennium Fujimori was quickly mired in scandal a month later as allegations of bribery involving Montesinos emerged. Fujimori then called for new elections, which would be won the following year by leading opposition figure Alejandro Toledo. Although many still hail Fujimori for restoring economic stability to Peru, it was his administration’s authoritative rule and more specifically its uncompromising crackdown on insurgent groups that would mar his time in office and eventually lead to his prosecution and imprisonment for crimes against humanity, bribery and embezzlement. Indeed, Fujimori still enjoys some level of support in Peru for his successful economic policy and addressing the issue of terrorism, which to a small extent has been illustrated by the support his daughter received during her presidential campaign in 2011.

ELECTIONS: Following Fujimori’s brief third presidential term, Congress sought to restrain presidential authority and avert the potential of a future dictatorship by preventing incumbent presidents from running for re-election for at least five years after their term in office. Voting in elections in Peru is mandatory for all citizens from the ages of 18 to 70, after which participation becomes optional.

The National Registry of Identification and Civil Status (RENIEC) is responsible for determining and tracking who must vote. The National Office of Electoral Processes (ONPE) organises and carries out elections, while the National Judiciary of Elections (JNE) supervises the process to ensure the legality of both elections and campaigns.

PARTIES & ALLIANCES: The 2011 general elections saw a number of significant changes to the makeup of Peru’s executive and legislative branches. While there were more than a dozen candidates running for the presidency, five frontrunners emerged: Luis Castañeda (National Solidarity Alliance), Pedro Pablo Kuczynski (Alliance for Great Change), Alejandro Toledo (Peru Possible), Keiko Fujimori (Force 2011) and Ollanta Humala (Peru Wins).

Former President García was unable to run due to the new regulations barring presidents from serving two consecutive terms in Peru, although that left the door open for his predecessor, Toledo, to reenter the fray. In fact, García’s party, APRA, did not even field a candidate.

Political parties in Peru are severely fragmented, as evidenced by the steady emergence of new organisations all along the political spectrum and the frequent merging of parties to pool political capital (see analysis). This is partly due to historical trends, though Fujimori’s strict regime also had a devastating effect on numerous parties.

The lack of institutionalised political parties – which usually bring strong voter loyalty – often forces candidates to run more personality driven campaigns. It also at times produces candidates of similar ideals running simultaneously, whereas elections in two-party systems typically weed out such candidates in the pre-election primaries.

In the first round of voting in April 2011, Ollanta Humala took the largest share of votes, just as he did in 2006 before he went on to lose the runoff election to García. Humala’s 31.7% was followed by Keiko Fujimori’s 23.6% and the two went to a runoff election in June, in which Humala defeated his opponent 51.4% to 48.5%. Sworn in on July 28th, 2011 ( National Independence Day), Humala became the third president since the ouster of Fujimori.

EXECUTIVE BRANCH: As president, Humala is the head of the government as well as the head of state. The president is elected for a five-year term and may serve more than once provided the periods are not consecutive. The vice-president is also elected alongside the president in the general election, and the current vice-president is Marisol Espinoza. In spite of being in the presidential line of succession, the vice-president serves no official capacity other than to stand in for the president in the case of death, illness, travel or any other related issues preventing the head of state from performing his or her duties.

The president appoints a prime minister, who advises him on the choice for minister in the rest of the cabinet. Oscar Valdés, former minister of the interior, is now the prime minister following a cabinet reshuffle in December 2011 that saw Humala change 10 of the 19 appointments. Salomón Lerner, Humala’s first prime minister and two-time campaign advisor, resigned on December 10th, 2011, following protests against the country’s largest foreign investment project – the Minas Conga mine in Cajamarca. Under Peruvian law, if the prime minister steps down, so too must his cabinet – though many are likely to be reinstated in the subsequent reshuffle. Members are not subject to individual approval from Congress, although the entire cabinet must be approved through a congressional vote of confidence.

Both the executive and legislative branch may propose laws, although the president must first obtain the approval of his cabinet. The president also must seek cabinet approval on any laws related to legislative and emergency decrees, for which he must also notify Congress. Finally, the president holds both general veto powers on approved legislation as well as the more specific line-item veto allowing for the deletion of specific clauses in a proposed law.

LEGISLATIVE POWER: The Congress is a unicameral legislative body made up of 130 representatives who, like the president, are elected to five-year terms. Eligible candidates for office must be Peruvian citizens of at least 25 years of age and are elected under a proportional representation system in which congressional seats are assigned to political parties according to the proportion of votes acquired by each party. There is a wide variety of political parties serving in the Congress, with six currently holding power (see analysis).

While the main function of the Congress is to pass bills into law, it is also responsible for ratifying treaties, authorising government loans and approving the federal budget (along with the Ministry of Economy and the executive branch). It serves the important role of acting as a counter-balance to the executive branch. The Congress may request information with regard to acts carried out by the executive branch, and it also has the power to call ministers before the entire Congress or any of its sub-committees and approve executive decrees issued by the president.

There are 22 sub-committees within Congress, all of which focus on specific legal issues. These include social, economic, environmental, foreign relations and security-related concerns. Congress is also divided into parliamentary groups, which are generally formed along party lines, although alliances among fractured political parties are common and occur to obtain a majority group when possible. The president of the Congress is currently Daniel Abugattás, a member of Humala’s Peru Wins party.

Until the dissolution of Congress under Fujimori in 1992, the legislative branch was bicameral, with a Senate and a Chamber of Deputies, which consisted of 60 and 180 delegates, respectively. The new constitution designed and introduced by the Democratic Constitutional Congress in 1993 reduced the legislative branch to one chamber, although today’s congress features an additional 10 seats.

THE JUDICIAL BRANCH: The judicial branch operates independently from the executive and legislative authorities. It consists of a four-tier national court system. At the top of the judicial branch sits the 16-member Supreme Court, which exercises jurisdiction over the entire nation.

Judges serving on the Supreme Court are appointed and ratified when needed by the National Council of the Judiciary, a seven-member elected body which also appoints public prosecutors, as well as supervising appointed public officials and disciplining them when appropriate.

Below the Supreme Court is the superior courts system, with each court presiding over defined judicial districts. For the most part, these correspond with Peru’s 25 departments, although there are actually 28 judicial districts. Beneath the superior courts are the trial courts, which are also referred to as courts of first instance. The trial courts oversee judicial issues at the provincial level. Finally, district courts known as courts of peace are responsible for serving individual districts in the country. The Constitutional Court, a seven-member judiciary body elected by Congress to five-year terms, is the last element of the judicial system, but only serves the purpose 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 subdivisions were known as departments, which changed in 2002 when Peru became subdivided into 25 administrative regions – though many still refer to them by the former name.

Three years later a referendum was held to further merge 15 of the 25 regions into five significantly larger regions, although voters opposed the move. Beneath the regions are the administrative subdivisions of provinces, of which there are a total of 195. Lastly, there are 1833 districts, the smallest administrative units in the country.

Regional governments are made up of a regional council, composed of the regional president, vice-president, secretary and council members, which number from a minimum of seven to a maximum of 25. All members of the council are elected to terms of four years. Regional councils were integrated in 2007 through the establishment of the National Assembly of Regional Governments, a significant event in the ongoing decentralisation process.

The capital city of Lima, which is home to roughly one-third of the entire population of the country, is the only province that does not belong to one of the 25 regions. However, prior to the alteration in 2002 it counted among the country’s departments. It is currently governed by the Metropolitan Municipality of Lima (MML), which is headed by Mayor Susana Villarán de la Puente.

OUTLOOK: After a campaign filled with promises of social inclusion, the new administration has its work cut out for it, though the early signs have been promising. Indeed, the administration has made it known it will seek to achieve its social goals without disrupting Peru’s current economic model.

Nevertheless, numerous obstacles remain in the path of the administration’s social agenda, including the reform of some of the current ineffective social cash-transfer programmes and the creation of new development-oriented programmes that can provide the much needed training, finance and infrastructure to assist micro- and small enterprises.

The early renegotiation of mining royalties (a significant campaign promise) was handled competently, although the impact of the new law of prior consent has yet to become fully apparent. Furthermore, the administration faces the delicate task of resolving the scores of social conflicts around the country that could easily harm investor confidence or popular support. It seems that 2012 could be a difficult year for the administration, but for the most part Peru’s upward trajectory looks set to continue.