Peru’s transformation in the past 15 years is a remarkable story of success. The country has become a stable force in South America and a vital ally of the United States, in a region where growing corruption scandals and the crisis in Venezuela have created new challenges for foreign policy. After a long battle against terrorism and a decade of authoritarian government, since 2001 Peru has seen five peaceful democratic transitions. Poverty nationwide has decreased by more than half, to less than 22% today. Trade with the United States has more than doubled thanks to the free trade agreement signed by both countries, which entered into force in 2009. Peru is a rising regional and global leader that is assuming important roles in regional and international organizations.
However, even if Peru emerges economically and politically, its achievements may conceal persistent structural challenges. As a middle-income country, Peru is at risk of falling into the ‘middle-income trap,’ wherein the weak and inefficient state institutions do not provide the necessary environment for continued economic growth and threaten to undermine the achievements of recent decades. Transnational criminal organizations operating throughout the Americas, including Peru, endangering legal trade and devastating communities through trafficking in persons and illicit goods. These problems are most acute in areas where the government is practically non-existent, especially in poor, rural and remote areas of the Amazon basin. Reducing these multi-million dollar illegal industries is now one of the most important objectives of United States’ foreign policy in Peru.