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. 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.
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.