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During the first term of President Fernando Belaúnde Terry (1963-1968), Peruvian foreign policy began to move in new directions, addressing unfamiliar issues, adopting fresh approaches, and consummating new bilateral and multilateral relationships. Successive Peruvian governments diversified arms transfers, broadened trade links, advocated a radical reorientation of the inter-American system, and pushed for enhanced regional economic cooperation. In a sustained period of innovation, each administration naturally emphasized different challenges and opportunities; however, the central direction of Peruvian foreign policy after 1963 reflected a continuity that transcended individual interests and goals. In pursuit of heightened Peruvian sovereignty, successive governments from Belaúnde to Fujimori sought to reduce external pressures and imposed conditions, especially from the United States. In the process, the intractable economic problems experienced by the Peruvian government repeatedly undermined key facets of Peruvian foreign policy. By the end of the first term of Alan García Pérez (1985-1990), Peru had defaulted on some $2 billion in loans from the International Monetary Fund and other lending agencies, making it one of the leading debtor nations in the world.

Setting the stage, 1990-2000
Alberto Fujimori, a virtual unknown in Peruvian political circles, won the 1990 presidential election by a commanding majority. After his election, Peruvian pundits referred to Fujimori’s campaign as a tsunami, a powerful image reflecting the magnitude and velocity of his final electoral surge. Understandably, the deplorable state of the Peruvian economy was the first priority of the Fujimori government. In an effort to improve relations with the international financial community, President-elect Fujimori traveled to Japan and the United States before his inauguration, and less than two weeks after he took office, he announced the initial phase of a stern economic stabilization program. Dubbed Fujishock, it was based largely on orthodox economic policies he had denounced during the campaign (Boloña 1996; Iguíñez 1998). Where the activist diplomacy of the García administration left little room for an improvement in bilateral relations with the United States, President Fujimori recognized that US government support was essential to the success of any attempt to restore the international standing of Peru. Consequently, he focused initially on the issues of drug production and drug trafficking, the policy areas of greatest interest to Washington. With Peruvians more concerned with combating guerrilla-terrorist movements, Fujimori’s approach highlighted the early pragmatism of his government (Luna 1999). Expected to agree to a substantial infusion of US military assistance to combat the drug problem, the Fujimori administration later surprised most observers when it argued that the drug problem could not be solved by military means alone, proposing an alternative approach which went beyond simple security concerns to address economic issues. The Peruvian approach, which became the basis for a formal umbrella agreement concluded between Peru and the United States in 1991, responded more fully to Peruvian concerns and priorities than the US one and thus represented an early diplomatic victory for the Fujimori government. In May 1995, Peru and the United States concluded a new agreement to promote alternative development and economic growth in the coca-growing zones, and one year later, they renewed their joint commitment to fight drug trafficking (McClintock and Vallas 2003: 117-118, 122-124, 128129; St John 1999b: 206, 213).
In April 1992, President Fujimori executed an autogolpe, suspending the 1979 constitution, padlocking the congress, and dismantling the judiciary. Five months later, the Dirección Nacional contra el Terrorismo captured Abimael Guzmán, the founder of Sendero Luminoso, crippling a guerrillaterrorist movement that had challenged the existence of the state for more than a decade. As these events unfolded, more and more Peruvians approved of Fujimori’s policies, especially his stabilization of the economy and his success in defeating guerrilla-terrorists; however, his mounting popularity did not silence criticism of alleged human rights abuses. The George H. W. Bush administration (1989-1993) condemned the autogolpe but refused to support broad economic sanctions on the grounds such action would jeopardize the war against terrorism in Peru (Ramacciotti and Méndez 2012: 105-106, 108-110; Palmer 1998: 26-27). In a 10 July 1992 cable to Secretary of State James A. Baker, the US Ambassador to Peru, Anthony C. E. Quainton, concluded just three months after the autogolpe that “Peru is heading in a direction which is consistent with our long-term interests”

As economic and political stability increased, the Fujimori government reinserted Peru into the international financial community and began to address issues of debt and development. This process was facilitated by the success of the economic reforms put in place after 1990. As stabilization policies ended a period of hyperinflation, economic growth increased, an ambitious privatization program picked up steam, exports increased, and the rate of foreign investment responded favorably to privatization and new investment laws. Efforts towards economic normalization culminated in a Paris Club agreement in July 1996 in which Peru restructured most of the US$ 9.25 billion owed to official creditors (Iguíñez 1998).

The formal movement toward enhanced regional cooperation began during the first Belaúnde administration with the 1966 Declaration of Bogotá committing Chile, Colombia, Ecuador, Peru, and Venezuela to the negotiation of an economic integration agreement. The 1969 Cartagena Agreement, signed by Bolivia, Chile, Colombia, Ecuador, Peru, and later Venezuela, established the Andean Common Market or Andean Group (Ffrench-Davis 1978: 34-8). The administration of Juan Velasco Alvarado (1968-1975) enthusiastically supported the Cartagena Agreement, but the support of subsequent Peruvian governments wavered. The second Belaúnde administration (1980-1985) reaffirmed Peru’s commitment to regional cooperation, but its approach to national development goals slowed progress toward Andean integration (Avery 1983: 156-65). In turn, the first García administration remained committed to the ideal of Latin American unity but demonstrated little interest in pursuing the strong initiatives necessary to resolve the growing crises faced by the Andean Group.

In contrast, President Fujimori sought from the start to accelerate the pace of regional integration. He presided over the opening meeting of the Andean Parliament when it convened in Lima in February 1991, and in May 1991, he joined the other Andean presidents for a two-day summit in Caracas. During the meeting, the participants agreed to establish a free trade zone by January 1992 and a common market by 1995. They also called for talks with the US government to discuss trade, investment, environmental, and drug trafficking issues, and they urged the US Congress to pass a bill under discussion which would encourage Andean agricultural workers to replace coca production with farm products exportable to the United States under preferential terms (St John 1996: 131-132). In early December 1991, the Andean presidents, under pressure from the Fujimori government to move forward with Andean integration, agreed in the Barahona Act to establish a free trade zone and a customs union in 1992. Unfortunately, the fallout from the autogolpe dealt a severe blow to ongoing efforts at regional cooperation and development (Seoane Flores 2000: 295-296). In August 1992, Peru announced its withdrawal from active participation in the Andean Group for a two-year period, and a few weeks later, Peru opposed a common external tariff during a meeting in Quito (St John 1999b: 218-220).
In January 1992, Peru concluded a 50-year renewable agreement with Bolivia in which Peru agreed to provide Bolivia with a duty-free port and an industrial park at the Peruvian port of Ilo in return for similar facilities at Puerto Suárez on the Paraguay River. Peru also ceded to Bolivia a tourist zone for 99 years, together with five kilometers of Ilo coastline. Bolivians immediately baptized the coastal strip “Boliviamar” (Ergueta Ávila 2000: 93-104). Both Bolivia and Peru hailed the pact as an historic step which would greatly benefit regional economic development (St John 1994: 24). In 1992, the Fujimori government also embarked upon a new round of talks with Chile aimed at the full implementation of the terms of the 1929 Tacna and Arica Treaty and Additional Protocol (Tudela 1999). Following lengthy negotiations, the foreign ministers of Peru and Chile signed a package of documents on 13 November 1999 that collectively executed the 1929 agreements, ending 70 years of controversy (Novak 2000). Foreign Minister Fernando de Trazegnies, an author and dedicated bibliophile, later expressed his satisfaction that the settlement included the return to Peru of some 200 books and documents that Chilean forces had looted during the War of the Pacific (Trazegnies 1999). In mid-1998, Peru also reached a free trade agreement with Chile that immediately removed tariffs on some 2,500 products with duties on other products to be phased out over a three to 18 year period (St John 1999b: 221).
As the 1990s progressed, the Fujimori government was increasingly active in the Asia-Pacific region. As early as 1872, the Manuel Pardo administration (1872-1876) had dispatched a diplomatic mission to China and Japan, and while these early efforts to expand commercial and other ties met with limited success, President Fujimori later built on his Japanese heritage to promote investment and trade with the region, including China, South Korea, and Japan (Gardiner 1975: 1-21, 42-60, 94-110, 127-55; Morimoto 1999: 213-25). In 1991, Peru became a member of the Pacific Economic Cooperation Council (PECC) and the Pacific Basin Economic Council (PBEC), and in 1998, it joined the Asia-Pacific Economic Cooperation (APEC) fórum. When the Movimiento Revolucionario Túpac Amaru (MRTA) guerrilla-terrorist movement attacked the Japanese ambassador’s residence in mid-December 1996, seizing 72 high-profile hostages, Fujimori authorized a successful commando raid in which all the guerrillas were killed. Widely popular in Japan, President Fujimori made his tenth visit to Japan in 1999 to mark the 100th anniversary of the first wave of Japanese emigration to Peru (McClintock and Vallas 2003: 38, 74-75).

In January 1995, the armed forces of Ecuador and Peru clashed in the most serious round of fighting since 1941. After a sustained diplomatic effort, the four guarantors of the 1942 Rio Protocol (Argentina, Brazil, Chile, and the United States) in October 1998 announced a Global and Definitive Peace Agreement, generally known as the Brasilia Accords (Tudela 1999). The agreement delimited the boundary line in the unmarked sector on the summit of the Cordillera del Cóndor and provided for the creation of two national parks in the frontier zone under the sovereignty and jurisdiction of the respective states. Ecuador also received one square kilometer of ground in Peru on the point designated as Tiwinza, the site of heavy fighting in 1995, but this transfer of land did not entail any “consequences as to sovereignty” with Ecuador enjoying real title except the right to transfer the property (St John 1999a: 30-49; Bákula 2002: II, 1344-1367).

President Fujimori promised a period of socioeconomic and political reform; instead, he presided over a decade of authoritarian rule, marked by a level of corruption previously unknown in Peru. Despite widespread improbity and venality that trampled on human rights, compromised domestic policies, and undermined state institutions, the Fujimori administration enjoyed more success in advancing core objectives of Peruvian foreign policy than any other government in the second half of the twentieth century. President Fujimori restructured the foreign debt on highly favorable terms and restored Peru’s standing in the international financial community, setting the stage for the pursuit of a more autonomous national development policy. Diplomatic and economic relations with important Asia-Pacific states expanded, and by the end of the decade, bilateral relations with the United States were the most positive in recent memory. The final implementation of the Tacna and Arica Treaty and Additional Protocol completed a process begun in 1929 when President Augusto B. Leguía (1908-1912, 1919-1930) negotiated the agreements, and the successful resolution of the Ecuador-Peru border dispute on terms highly favorable to Peru achieved a goal of successive Peruvian governments since independence.
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