Peru: History

The Inca Empire and Spanish Conquest
When the Spanish landed in 1531, Peru's territory was the nucleus of the highly developed Inca civilization. Centered at Cuzco, the Incan Empire extended over a vast region from northern Ecuador to central Chile. In search of Inca wealth, the Spanish conqueror Francisco Pizarro, who arrived in the territory after the Incas had fought a debilitating civil war, conquered the weakened people. The Spanish captured the Incan capital at Cuzco by 1533, and consolidated their control by 1542. Gold and silver from the Andes enriched the conquerors, and Peru became the principal source of Spanish wealth and power in South America.

Pizarro founded Lima in 1535. The viceroyalty established at Lima in 1542 initially had jurisdiction over all of the Spanish colonies in South America. By the time of the wars of independence (1820-24), Lima had become one of the most distinguished and aristocratic colonial capitals and the chief Spanish stronghold in the Americas (along with Mexico City).

Independence
Jose de San Martin of Argentina and Simon Bolivar of Venezuela led Peru's independence struggle. San Martin proclaimed Peruvian independence from Spain on July 28, 1821. Emancipation was completed in December 1824, when Venezuelan Marshall Antonio Jose de Sucre defeated a Spanish army at Ayacucho, ending Spain's rule in South America. Spain subsequently made futile attempts to regain its former colonies, but in 1879 it finally recognized Peru's independence.

After independence, Peru and its neighbors engaged in intermittent territorial disputes. Chile's victory over Peru and Bolivia in the War of the Pacific (1879-83) resulted in a territorial settlement in which Peru ceded the department of Tarapaca and the provinces of Tacna and Arica to Chile. In 1929, Chile returned Tacna to Peru. Following a clash between Peru and Ecuador in 1941, the Rio Protocol--of which the United States is one of four guarantors (along with Argentina, Brazil and Chile)--sought to establish the boundary between the two countries. Continuing boundary disagreements led to brief armed conflicts in early 1981 and early 1995, but in 1998 the governments of Peru and Ecuador signed an historic peace treaty and demarcated the border. In late 1999, the governments of Peru and Chile likewise implemented the last outstanding article of their 1929 border agreement. Peru and Chile still dispute the maritime boundary.

Contemporary History

Military Rule and Return to Democracy (1968-1980)
The military has been prominent in Peruvian history. Coups have repeatedly interrupted civilian constitutional government. The most recent period of military rule (1968-80) began when General Juan Velasco Alvarado overthrew elected President Fernando Belaunde Terry of the Popular Action Party (AP). As part of what has been called the "first phase" of the military government's nationalist program, Velasco undertook an extensive agrarian reform program and nationalized the fishmeal industry, some petroleum and mining companies, and several banks.

Because of Velasco's economic mismanagement and deteriorating health, he was replaced in 1975 by General Francisco Morales Bermudez. Morales Bermudez tempered the authoritarian abuses of the Velasco administration and began the task of restoring the country's economy. Morales Bermudez presided over the return to civilian government under a new constitution, and in the May 1980 elections President Belaunde Terry was returned to office by an impressive plurality.

Instability in the 1980s
Nagging economic problems left over from the military government persisted, worsened by an occurrence of the "El Nino" weather phenomenon in 1982-83, which caused widespread flooding in some parts of the country, severe droughts in others, and decimated the fishing industry. The fall in international commodity prices to their lowest levels since the Great Depression combined with the natural disasters to decrease production, depress wages, exacerbate unemployment, and spur inflation. Bloated state-owned companies compounded the deteriorating fiscal situation. The ensuing economic collapse was reflected in worsening living conditions for Peru's poor and provided a breeding ground for social and political discontent. The emergence of two terrorist groups--Sendero Luminoso (Shining Path) in rural areas in 1980, followed shortly thereafter by the Tupac Amaru Revolutionary Movement (MRTA) in Lima--sent the country further into chaos. The terrorists were financed in part from alliances with narcotraffickers, who had established a stronghold in the Peruvian Andes during this period. Peru and Bolivia became the largest coca producers in the world, accounting for roughly four-fifths of the production in South America.

Amid inflation, economic hardship, and terrorism, Alan Garcia Perez of the American Popular Revolutionary Alliance (APRA) won the presidential election in 1985. The transfer of the presidency from Belaunde to Garcia on July 28, 1985, was Peru's first transfer of power from one democratically elected leader to another in 40 years. The Garcia administration’s economic mismanagement led to hyperinflation from 1988 to 1990 and concerned about the economy, the increasing terrorist threat from Sendero Luminoso, and allegations of official corruption, in 1990 voters chose as President a relatively unknown mathematician-turned-politician, Alberto Fujimori.

The Fujimori Decade (1990-2000)
Although he ran on a populist platform, promising not to implement the macroeconomic shock package proposed by his opponent, novelist Mario Vargas Llosa, the severe economic situation forced Fujimori to carry out radical changes. He immediately implemented drastic economic policies to tackle inflation (which dropped from 7,650% in 1990 to 139% in 1991), but encountered opposition to further economic reforms, including dealing with the growing insurgency. On April 5, 1992, Fujimori dissolved the Congress in an "auto-coup," revamped the constitution, and intervened in the Supreme Court. Later, pressured by the international community, Fujimori called new congressional elections. With a large majority in Congress, Fujimori proceeded to govern unimpeded. Large segments of the judiciary, the military and the media were co-opted by Fujimori's security advisor, Vladimiro Montesinos. The government unleashed a counterattack against the insurgency that resulted in numerous human rights abuses on both sides and eventually quashed the Shining Path and MRTA. During this period Fujimori introduced far-reaching legal and economic reforms, privatized most state-owned companies, removed investment barriers, and significantly improved public finances. In 1998, Fujimori reached a milestone peace accord with Ecuadorian President Jamil Mahuad related to the common border, ending decades of hostility between the two countries.

Fujimori's constitutionally questionable decision to seek a third term, and subsequent tainted electoral victory in June 2000, brought political and economic turmoil. A political bribery scandal that broke just weeks after he began his third term in July forced Fujimori to call new elections in which he would not run. Fujimori fled to Japan and resigned from office in November 2000. A caretaker government under Valentin Paniagua presided over new presidential and congressional elections in April 2001. In the presidential contest, Alejandro Toledo defeated Alan Garcia (who had returned to Peru that year after several years in France) in a runoff and took office on July 28, 2001.

The Toledo Administration (2001-2006)
The Toledo government consolidated Peru's return to democracy, a process that had begun under President Paniagua. Despite being a frequent target of political and media criticism, Toledo maintained strong commitments to freedom of the press. The government undertook initiatives to implement the recommendations of the Truth and Reconciliation Commission (TRC), which had been charged with studying the circumstances surrounding the human rights abuses and violations committed between 1980 and 2000. Criminal charges for corruption and human rights violations were brought against former President Fujimori. Fujimori was detained in Chile in November 2005 and extradited to face criminal charges in Peru in September 2007. On December 11, 2007, Fujimori was convicted of ordering an illegal search and seizure of documents and sentenced to 6 years in prison. In April 2009, Fujimori was convicted of human rights violations and sentenced to 25 years in prison. He was convicted in July and September 2009 on embezzlement and corruption charges, respectively, sentenced to 7.5 years, and ordered to pay $10 million in civil reparations.

Under President Toledo, Peru negotiated a trade promotion agreement (the PTPA) with the U.S. (later signed by President Garcia in 2007). Toledo also unveiled plans to construct a road connecting Brazil and Peru's isolated interior to the Pacific coast. Toledo's economic management--a continuation of Fujimori’s--led to an impressive economic boom in Peru that remains strong. Poverty reduction was uneven, however. Although poverty in some areas decreased to 15.8% during the Toledo administration, nationally it only decreased by 9.8% and nearly half (44.5%) of Peruvians were still living below the poverty line. In 2005 the government implemented "Juntos," a program to double the income of people living in extreme poverty (17.4% that year).

The Garcia Administration
On June 4, 2006, APRA candidate Alan Garcia Perez was elected to the presidency by 52.5% of the voters in his runoff with Ollanta Humala, who won the first round under the Union for Peru party banner, with the support of his Peruvian Nationalist Party. APRA also won 36 congressional seats and controls the largest voting bloc. After his disappointing presidential term from 1985 to 1990, Garcia returned to the presidency with the intention of turning around the perception of him that his first term had generated. During his second term, Garcia has overseen a robust macroeconomic performance, including strong GDP growth and declining poverty levels (39.3% of Peruvians were “poor” in 2007, 36.2% in 2008, and 34.8% in 2009). Since the onset of the international financial crisis in late 2008, Garcia’s low popularity has begun to recover. A violent clash between indigenous protesters and the police in the Amazon in June 2009, in which 10 protesters and 24 police officers died, prompted Garcia’s biggest political crisis to date, and his approval rating dropped to 20% (with 76% of Peruvians disapproving of him). His popularity has rebounded, and is now at about 30%. Internationally, Garcia has sought to reenergize Peru’s international relations and economic relations with the world and to showcase Peru's democratic and pro-free trade path as a model for the region. He successfully hosted two international summits in 2008, the European Union-Latin America and Caribbean summit and the Asia-Pacific Economic Cooperation (APEC) leaders’ summit, and the Organization of American States General Assembly in 2010. The U.S.-Peru Trade Promotion Agreement (PTPA) went into effect in February 2009. Peru has signed trade deals with Canada, Singapore, China, the European Union, and Korea and has begun trade negotiations with Japan and others.

Sources:
CIA World Factbook (September 2009)
U.S. Dept. of State Country Background Notes (September 2010)