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A New Zealand Embassy was established in Lima in 1972, but closed in 1990 for financial reasons and because of the difficult conditions prevailing in Peru at that time. The New Zealand Ambassador in Santiago is accredited to Peru. The Peruvian Embassy in Wellington also closed in 1990, but a Consulate-General was established in Auckland in 1992 and the Peruvian embassy in Wellington was re-opened in 1996.
The two countries signed a Memorandum of Understanding establishing formal foreign policy talks in May 1998. The first two rounds of talks took place in Lima in June 2002 and July 2004, with further rounds in Wellington in November 2005 and in Lima in October 2006. In 1989 Peru acquired Antarctic Treaty Consultative Party status with New Zealand support, and Peru hosted the twenty-third ATCM in Lima in May 1999. An Agreement for Technical Cooperation on Fisheries between Peru’s Maritime Institute (IMARPE) and the Institute of Geological and Nuclear Sciences (IGNS) was signed in May 1998, and in 2005 IMARPE signed a cooperation agreement with New Zealand NGO Southern Seabirds Solutions to mitigate by-catch of seabirds in fishing practice.
During the late 1970s New Zealand funded a pasture development project in the highlands of southern Peru based around the town of Puno. Current New Zealand development assistance includes post-graduate scholarships for Peruvian students to study in New Zealand, Short Term Training Awards, and a Head of Mission Fund (HOMF) for small-scale, community-based projects. In July 1999 the Government waived outstanding debts of US$5 million as a result of trade credits extended in the 1970s. A revised New Zealand Aid programme includes the Andean sub-region of Peru, Bolivia and Ecuador as one of its areas of focus, with thematic priorities being sustainable rural development and good governance.
The University of Otago has signed memoranda of understanding with the National University Federico Villarreal and National University of San Cristobal de Huamanga in Peru and has established linkages for staff exchanges, academic materials exchanges, and collaborative research. Lincoln University signed a memorandum of understanding in June 1998 with the Universidad Agraria La Molina, an agricultural university. The Latin America Studies Centre at Auckland University has links with the Universidad Pacífico, which hosts an APEC Study Centre.
Peru was a signatory to the Multilateral Agreement on the Liberalisation of International Air Transport, which entered into force in 2002, along with New Zealand. However Peru announced in 2004 its decision to withdraw from the agreement.
Trade has been a key element in the Peru-New Zealand relationship. Peru has been a significant market for New Zealand dairy products, although a recent decline in dairy exports has seen overall trade figures fall sharply as milk production has risen in Peru. New Zealand exports to Peru in 2006 amounted to NZ$26.4 million, an increase from the previous year, but down from $38 million in 2004. Imports from Peru rose again to NZ$14.8 million in 2006, up from $11.2 million the year before.top of page
Land Area - 1,285,216 sq km
Population - 28.2 million
Capital City - Lima
Official Languages - Spanish, Quechua, Aymara
President - Alan García Pérez
GDP ($USbn) 79.4 (2005), 93.3 (2006)
GDP per capita ($US) 2,812 (2005) 3,310 (2006)
GDP Growth (%) 6.4 (2005), 8 (2006)
Inflation % av 1.6 (2005), 2 (2006)
Unemployment (%) 8 (2005), 7.7 (2006)
Goods & Services Exports (% of GDP) 24.5 (2005), 25.5 (2006)
Source: Economist Intelligence Unit
Bilateral Trade with Peru - Exports FOB - 2000: NZ$ 79.65m; 2001: NZ$ 84.9m; 2002: NZ$ 45.3m; 2003: NZ$ 37.6m; 2004: NZ$ 37.9m; 2005: NZ$ 22.4m;2006: NZ$ 26.4m
Imports CIF - 2000: NZ$ 4.52m; 2001: NZ$ 5.6m; 2002: NZ$ 6.3m; 2003: NZ$ 10.7m; 2004: NZ$ 10.8m; 2005: NZ$ 14.7m; 2006: NZ$ 13.1m
Top 5 Exports to Peru (Year to December 2006 FOB) - Milk and cream $NZ 10.2m;
Malt extract $NZ 5.5m;
Guts, bladders and stomachs of animals $NZ 3.4m;
Butter and other fats $NZ 2.7m;
Buttermilk, yoghurt, cream $NZ 1.0m -
Total top 5 exports $NZ 22.8m -
Total exports $NZ 26.4m
Top 5 Imports from Peru (Year to December 2006 CIF) - Furskin articles/clothing $NZ 6.0m;
Meat or fish meal $NZ 1.3m;
Boric acids $NZ 1.0m;
Tanned/dressed furskin $NZ 0.9m;
Tropical fruit, dried or fresh $NZ 0.8m
Total top 5 imports $NZ 10m -
Total imports $NZ 14.76m
The Republic of Peru lies in western South America, bordered by Ecuador and Colombia to the north, by Brazil and Bolivia to the east, and by Chile to the south. Peru has a Pacific coastline of more than 2,300 kilometres.
Peru is a Presidential democracy. The President is directly elected for a five-year term, and appoints a Council of Ministers whose head is regarded as prime minister. The President may be elected for a second but non-consecutive term. Legislative power is vested in a 120 member single chamber which can be dissolved only once during a Presidential term. Members are elected on a national basis every five years by a system of lists prepared by the parties.top of page
Peru has been in the process of a political transformation since ex-President Alberto Fujimori’s controversial departure from office seven years ago. During a decade in office, Fujimori made significant progress in stabilising and opening up the Peruvian economy, and reducing the threat of the left-wing guerrilla movement Sendero Luminoso. But in November 2000, amidst allegations of corruption and undemocratic government, Fujimori resigned while in Japan. He lived in exile in Japan until November 2005 when he was arrested by Chilean authorities after entering Chile. He has been in Chile since then, awaiting the Chilean Supreme Court’s verdict on his extradition as requested by the Government of Peru, where he has been wanted since March 2003 to stand for allegations of human rights abuses committed during his administration. On 7 June 2007 the Chilean Supreme Court Prosecutor recommended that Fujimori be extradited to Peru as there was evidence of his culpability in 10 of the 12 cases for which his extradiction had been sought. The Prosecutor’s report will be passed to a Chilean judge for a decision, and that decision may be appealed before the Supreme Court.
Following Fujimori´s resignation in 2000 a transitional Government headed by President Valentín Paniagua was appointed to run the country until presidential and congressional elections were held in 2001. The second and decisive round of voting in the Presidential election on 3 June 2001 was won by Alejandro Toledo, a Harvard trained economist. Toledo beat the leader of the main opposition party APRA, former president, Alan Garcia. President Toledo’s priorities were poverty reduction, political reconciliation, decentralisation and the fight against corruption; however his administration was marked by poor popularity ratings and corruption scandals. Toledo’s term was notable for its macroeconomic successes under Finance Minister Pedro Pablo Kuczynski (who became Prime Minister in the final 6 months of government) who oversaw prudent economic and fiscal policy which helped the Peruvian economy grow by almost 25% over this period. Inflation was kept low, and exports, particularly from the agricultural sector, grew significantly. Toledo’s parting achievement was the successful conclusion of negotiations with the United States on the Peru-US Trade Promotion Agreement (FTA) and its passage through the Peruvian Congress a month before his term expired. However employment creation during his term was not as high as promised, and popular discontent was regularly expressed in protests, including a small military uprising in early 2005.
Presidential and Congressional elections were held in April 2006, which saw the hitherto unknown ex-military nationalist Ollanta Humala of Union for Peru (UPP) gain 30.62% of the votes, former socialist president Alan Garcia of the APRA party gain 24.32%, and Lourdes Flores of National Unity (UN) gain 23.8%. The result was a bitter blow for Flores who lost out to Garcia in the first round of Presidential elections in 2001.
After a heated campaign between Humala and Garcia, in which Humala was publicly supported by Venezuelan President Hugo Chavez, Garcia won the second round of presidential elections on 4 June 2006, to become President of Peru for the second time. Garcia gained 52.5% of the votes to Humala´s 47.5%. The voting showed a strong regional split, with urban and northern electorates supportive of Garcia, and southern and rural (high indigenous population) electorates in support of Humala. Garcia was inaugurated on 28 July 2006, and promised not to repeat the mistakes of his earlier presidency (which resulted in hyperinflation, instability and the rise of Shining Path terrorism). Garcia promised to build on economic prosperity through open markets, attracting foreign investment and pursuing a liberal trade agenda. He has begun his term with an emphasis on domestic fiscal austerity, including by cutting political and public servant salaries. The 120 congressional seats are split between UPP who hold 45, APRA with 36, the UN with 17, followed by the Fujimorista party “Alliance for the Future” with 13, and the remaining 9 seats split between 3 minority parties.top of page
Peru has undergone a complete economic turn-around over the last fifteen years. From a position of virtually no foreign reserves, and with annual inflation at over 7,500% in Garcia’s first presidency in the late 1980s, the country now enjoys reserves of around US$10 billion and inflation for the last four years has averaged 3%. Price stabilisation and the dismantling of the two guerrilla groups, Shining Path and MRTA, paved the way for large capital inflows - more than US$15 billion in foreign direct investment entered Peru between 1990 and 2000. This investment fuelled strong GDP growth through much of the 1990s and into the 2000s.
8 Much of the capital inflow was related to the extensive privatisation programme of the Fujimori government: in telecommunications, banking, tourism, the national airline, and industry sectors such as iron production. The Toledo government proposed to continue with privatisations in the electricity, ports and mining sectors. However, these privatisation plans became the focus of public protests and were postponed.
9 Under President Toledo, Peru had one of the best performing economies in Latin America, with average economic growth of 5.1% per year from 2001 to 2006. Growth reached 8% in 2006 on the back of strong domestic demand and continuing export growth. Trade and fiscal surpluses were achieved. Economic expansion has also been driven by construction, mining and investment (particularly in the Camisea natural gas project). Inflation was 2% in 2005.
10 The mining industry remains vital to the Peruvian economy, accounting for more than 30% of Peru’s total exports. Peru is a world-leading producer of silver, copper and gold.
Peru has largely resolved long-standing border disputes with neighbours Ecuador (which at times had led to armed conflict) and Chile. In 1998 Peru signed a peace accord with Ecuador, and in 1999 signed three agreements with Chile which put to rest the remaining obstacles holding up implementation of the 1929 Border Treaty. However, Peru recently challenged Chile over maritime delimitation, which came to a head in November 2005 with Peru’s enactment of legislation to support a change in its maritime boundary with Chile. This situation was further complicated by the arrival of ex-President Fujimori in Chile at the same time. Chile’s new President, Alan Garcia, has put aside irritants and is committed to a positive bilateral relationship with Chile, a highlight of which was the Chile/Peru FTA signed in August 2006. Garcia and his Foreign Minister, Belaunde, have promoted the importance of regional integration. Garcia is opposed to Venezuelan President Chavez’s efforts to lead a Bolivarian Revolution, and resented the latter’s interference in Peru’s 2006 presidential election campaign.
12 Peru successfully hosted the Ibero-American summit in November 2001, the Rio Group summit of Latin American countries in 2003, and the South American Presidential summit in Cusco 2004 (the precursor to the new South American Community of Nations) thereby reasserting itself in hemispheric diplomacy. US President Bush visited Lima in March 2002, his first visit to a South American country.top of page
The Peruvian economy is open to foreign trade. Trade barriers have been reduced, all direct subsidies to exporters and domestic producers have been eliminated and equal treatment granted to foreign and domestic investors. Transfers in and out of the country can be carried out without difficulty. There are no exchange rate controls, with the rate subject to market forces. The Central Bank occasionally intervenes in the market. Foreign companies can operate in Peru either as wholly owned subsidiaries, in conjunction with Peruvian partners, or on a joint venture basis, and on the same terms as local companies.
14 Peru’s major export markets in 2006 were the United States (31%), China (11%), Chile (6.6%) and Canada (6%). Peru’s main imports in 2006 were sourced from the USA (19.9%), China (9.3%), Brazil (8.7%) and Ecuador (8.1%%).
15 The Peruvian Congress approved the Peru-US Trade Promotion Authority (FTA) in July 2006. However, the agreement has yet to pass through the US Congress, mainly because of concerns about labour provisions. In August 2006 Peru and Chile signed a bilateral FTA, the first between South American countries, which builds on its earlier Agreement on Economic Complementation. Peru recently concluded a free trade agreement with Thailand, and is currently concluding FTA negotiations with Singapore. Peru is a key member of the Andean Community customs union with Bolivia, Colombia and Ecuador. Peru joined APEC at Kuala Lumpur in 1998 and will host APEC in 2008. It has been a member of the Pacific Economic Cooperation Conference (PECC) since 1990, and is also a member of the Pacific Basin Economic Council (PBEC). Peru joined MERCOSUR as an associate member in 2003. Any future negotiations with the European Union are likely to be as a member of the Andean Community.
The Safetravel website provides a travel advisory for travellers to Peru [external link].
