- Business Monitor International Ltd www political outlook ernment under Alberto Fujimori to a parliamentary democracy, helped by a commodity boom that drove the export-led economy to record levels of sustained expansion. However, economic growth has not been equitable, helping to stoke underlying eth- nic and social tensions in the country and heightening concerns about the potential for long-term political instability. ...In August ----, the Peruvian assembly almost unanimously approved a new law that gives indigenous communities the right to be consulted about, and then approve, all projects likely to impact their environment. We believe this new law has the potential to mitigate social tensions triggered by new mining projects in the coming years, though with the implementation process still being worked out, it is too early to expect an end to indigenous- related violence over the medium-to-long term. Endemic Corruption: Despite numerous government cam- paigns, corruption remains endemic in Peru, with judicial complaints of political interference and accusations of the misappropriation of public funds commonplace. ...Tackling The Drug Trade: In ----, Peru surpassed neighbour- ing Colombia to become the world s top producer of pure cocaine, according to the US Drug Enforcement Administration, and we see little to suggest that production will slow substantially in the coming years. With tough crackdowns on drug production under way elsewhere in the region, we believe that there will be increased pressure to switch cultivation to Peru, forcing the government into expensive drug-reduction programmes that -- Business Monitor International Ltd www
...The downtrend in Humala s approval rating has since resumed and now stands at -- , an all-time low. Respondents cited a lack of security, poor leadership and endemic corruption as reasons for their disapproval. ...The government s attempts to stem the growth of small-scale miners while encouraging the expansion of large- scale operations has struck many in Peru as at odds with the government s stated policy aims of alleviating poverty, and has led to major protests that have resulted in significant delays and cost mining companies billions of dollars. The government is trying to promote agriculture and other means of employment to help ease the economic burden of mining formalisation on local communities, but the illegal mining industry took decades to become such an important source of employment and revenue, and rolling it back will also take many years, with political risk likely to remain on centre stage as a result. Long-term political outlook Mining Disputes Main threat to stability ...The government is trying to promote agriculture and other means of employment to help ease the economic burden of mining formalisation on local communities, but the illegal mining industry took decades to become such an important source of employment and revenue, and rolling it back will also take many years, with political risk likely to remain on centre stage as a result. Long-term political outlook Mining Disputes Main threat to stability
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