Peru Economic Conditions

Investments and conflicts

While Peru’s development model based on non-renewable commodity extraction has provided economic growth, it has also led to social and environmental conflicts in all parts of the country. As of February 2015, the Peruvian Ombudsman estimates that there are 160 ongoing conflicts in the country. 120 (75 percent) of these are social and environmental conflicts, of which 78 (65 percent) are related to mining and 20 cases (16.7 percent) are related to oil and gas projects.

These figures show that growth in Peru has come with high environmental and social costs. Furthermore, according to statistics on poverty and inequality, they show that not everyone benefits from Peru’s “development”. Many ordinary Peruvians remain deeply disappointed and feel left out and sacrificed in the name of “modernity”.

Social and environmental conflicts in Peru mainly arise when the local population is excluded from decision-making processes. This is especially true of themes that will affect their lives directly or indirectly through the impact on the environment they depend on. Through advances in communication technology, communities, interest groups and grassroots movements have stepped up their political organization in recent decades. Civil society actors are better informed today about their fundamental rights, because they have formed alliances that often extend beyond the local. They therefore dare to challenge the intrusion of the state and companies to a greater extent, and are more difficult to bring to silence.

The Peru government has historically responded with oppressive state violence and by criminalizing social protest. We also see this today. The conflict in Bagua, mentioned above, is perhaps the best known in a series of serious social and environmental conflicts in Peru that have been featured in international media. In 2009, Indigenous people from the Amazon led a large and peaceful protest march outside the city of Bagua. They objected to the announcement of a number of regulations that would favor trade agreements, but at the same time violate the rights of indigenous peoples to their territories. To break up the demonstrations, the police used force, which led to a bloody tragedy. Nearly six years later, around 50 indigenous leaders, accused of inciting violence, are still awaiting final verdicts in their cases.

Conga, a mining project in the province of Cajamarca, is another long-standing conflict. The project is planning an expansion of the Yanacocha gold mine, the largest gold mine in Latin America. The planned operations will take place at the springs to five smaller water sources. These are fundamental to the water displacement of the provinces of Cajamarca and Celedín, where the population is largely dependent on self-storage agriculture. There is strong local opposition to Conga. The main concern is that mining will affect the water displacement and water quality. Protests happen regularly. In July 2012, when the government stated that the project would continue despite local resistance, at least three protesters were killed as police stopped protests violently.

A young, local peasant woman named Maxima Acuña de Chaupe has become the latest symbol of resistance to the mine. Even after being intimidated, accused of robbing land and sued by the mining company, Acuña de Chaupe and her family continue the struggle to live on earth as the mining company claims to belong to them. She was first convicted, but later acquitted of all charges in a higher court in 2014. Acuña de Chaupe was awarded the “Defender of the Year 2014” award by the Latin American women’s network ULAM.

These examples of cases of social protests, as well as dozens of cases regularly reported by Peru’s Ombudsman, reveal the less pleasing realities of Peru: the disturbing “side effects” of a largely neoliberal recovery policy that benefits an economic elite based mainly in Lima or in abroad, and rarely ordinary citizens.


To be consulted before any business or project that will affect your life is a right that is properly defined in international law. Peru ratified ILO Convention No. 169 on Indigenous Rights in 1994. It provides that the government should develop national legislation in accordance with the convention. Nevertheless, it was not until 2011 that Peru finally passed a law on advance consultation for indigenous communities.

The law may well be intended, and a step in the right direction, but it has received much criticism from the Peruvian civil society. The most important point is that the law deals with “consultation” and not “consent”. After a consultation process is completed, the state can take into account the opinions of the consultants, but they are not obliged to do so. In other words, there is no assurance that the state respects the decisions of consulted communities.

Peru has recently made its first practical experience with the law on advance consultation. The planned establishment of the Maijuna-Kichwa Regional Protection Area in the Amazon region of Loreto is considered the country’s first consultation event. The process, however, did not go smoothly. Early in the process, only the maijuna people were consulted. The Kichwa people, who would also be affected in the proposed area, quickly expressed their dissatisfaction with being left out. Finally, both the maijuna and the kichwa people have agreed on the proposal to create the conservation area. However, the state has still not complied with this decision by formally establishing the Maijuna-Kichwa Reserve.

The first consultations on oil and gas operations took place in early 2015 in the Ucayali region, when oil license 169 was to be auctioned off. Insufficient participation by the indigenous people concerned, partial information sharing, and deliberate exclusion of local people’s counselors were quickly reported. Despite plenty of criticism from civil society, the Peruvian Ministry of Energy and Mining declared the consultations a success and an example to follow.

To sacrifice the environment and its people

The oil concession consultation process 169 is just the first in a series of more to come. In 2012, Peru announced ambitious plans to auction off over 30 new oil licenses. In the Amazon region alone, more than 75 percent of the area will be attributed to the oil and gas concessions. The aggressive auction process led by the state agency Perupetro started in 2014.

According to, oil and gas extraction in Peru has a history that extends over 40 years back in time. As early as 1971, the US company Occidental Petroleum was granted permission to start operations north of the Peruvian Amazon, in what is known as oil block 1AB. 43 years later, indigenous peoples along four major rivers have finally managed to get the state to prove what they have been claiming for decades. Water bodies, soils and sediments are heavily contaminated with heavy metals and other pollutants as a result of oil operations. This poses a major health risk to the local population. When the results of the scientific testing came, the state had to declare environmental state of emergency in the four river basins.

Just as Peru’s lack of adequate environmental standards and the government’s enforcement of these came under public scrutiny and was criticized, Peru’s government launched a new attack on environmental law. Predicting that the economy has stagnated, the Ministry of Finance in June 2014 pushed through a new set of reforms to revive the economy and promote new investments. To put it bluntly, these reforms, known as el paquetazo, the “big package”, lower environmental standards and cut down the authority of the Ministry of the Environment and its monitoring agencies.

The cases mentioned represent a great paradox. In September 2014, Peru signed a potential multimillion deal with Norway and Germany to curb deforestation and reduce CO2 emissions. In December 2014, Peru hosted the annual climate summit, the most important environmental event in the world. While the Peruvian leadership of the conference described the final text adopted as a success, civil society in Peru and internationally criticized what they see as a weak and disappointing text.

Humala’s government discourse has been much about environmental management. But in reality, Peru has further weakened its environmental legislation and promoted mining and oil and gas extraction.

Growth at all costs?

While there is great optimism related to Peru’s ongoing economic growth and, to a certain extent, poverty reduction, there is concern on closer examination. Peru’s development model is based on natural resource extraction, a model that has been tested in many other Latin American countries, and in other parts of the world. Although it has often led to short-term benefits, especially for the elites and the capital, it has generally failed to provide sustainable development and general welfare to larger sections of the population. The many social and environmental conflicts that are currently unfolding in Peru are examples of this. Peru’s growth strategy is by no means sustainable for the environment, although the current government’s discourse wants the public to believe it.


Capital: Lima
Population: 30.74 million (2016)
Life expectancy: 73.7 years (2016)
Infant mortality: 19 per 1,000 (2016)
GDP per capita (pp): US $ 13,000 (2016)
Religion: Catholicism 81.3 %, evangelism 12.5%, other 3.3%
Official languages: Spanish, Quechua and Aymara
Currency unit: New sun
Main export items: Copper, gold, lead, zinc, tin, iron ore, molybdenum, silver, natural gas, crude oil and petroleum products, clothing and textiles, chemicals, fish, fishmeal, coffee, asparagus, vegetables and fruits.
Regional connections:Member of Mercosur (Associate Member), CELAC, UNASUR, OAS and the Pacific Alliance.