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Peru

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Progress on environmental protection
Priority areas of German cooperation with Peru
Democracy, civil society, public administration
Water supply and sanitation
Sustainable rural development, and conservation and sustainable management of natural resources
Civil Peace Service

Situation and cooperation

Children in Peru. Copyright: Jürgen KernThe Peruvian economy is benefiting from the liberalisation and privatisation measures introduced in recent years and from the changed political climate in the country. After years of very high growth, economic growth dropped in crisis year 2009 to 0.9 per cent. But only one year later the Peruvian economy had already recovered and growth is forecast to reach 6.3 and 6.0 per cent in 2010 and 2011 respectively. That puts Peru in the forefront in Latin America. The main factor behind the good overall economic development is foreign trade: even in crisis year 2009, goods worth 26.5 billion US dollars were exported abroad - despite a 14 per cent fall in exports over 2008. Total exports are expected to exceed the 30 billion US dollar mark in 2010. The main exports are copper, zinc, lead, fish products, textiles and agricultural products such as coffee, asparagus and peppers.

However, large sections of the population are still not benefiting sufficiently from economic development. While agricultural producers have created new income opportunities in the rural areas of the coastal region, in the Andean highlands and the Amazon basin poverty remains widespread. While the poverty rate has fallen below 25 per cent in the urban areas, in the rural areas almost 60 per cent of Peruvians still live below the poverty line. On the 2009 Human Development Index (HDI) Peru ranks 78 out of 182 countries.

Extreme social inequality remains a key policy challenge for the Peruvian government. The rural poor, for example, suffer from major shortcomings in public health care and water supplies. The plan Perú 2021, launched in March 2010, is intended to overcome these and other constraints on development. In 2008 a national health insurance system was also set up. It enables poor people to access health care services free of charge and already covers about 50 per cent of the population.

One particular problem in Peru is drug cultivation. It is a tightly organized and highly productive business controlled by international drug cartels. Along with Colombia and Bolivia, Peru is one of the world's largest coca producers. For many farmers, growing coca is the only way to earn a living. After a temporary decline the area under cultivation has increased again in recent years. Another problem is illegal gold mining, which is fuelled by the rapidly rising gold price on the world market. In the Amazon region especially it is having a devastating impact on the natural environment and the people living there. As long as no alternative sources of income are available, the highly productive illegal areas of the economy, such as drug production and trafficking, logging and gold mining, will continue to play an important role.

Many rural development projects are therefore concentrating on promoting the production and marketing of legal agricultural products.

Progress on environmental protection

Seeds fair in Peru. Copyright: BMZGood progress has been made in recent years on environmental protection legis­lation. Almost 15 per cent of the total area of the country has now been declared a protected area; logging has been regulated by granting concessions. Outside the protected areas, however, the destruction of natural resources continues apace, for illegal logging and drug cultivation promise huge returns. Moreover, the poverty-linked spread of cropland to unsuitable soils in the Andean highlands has led to a vicious circle of soil degradation, migration as a consequence thereof and the cultivation of previously unused land. The "agricultural front" has now spread to the eastern slopes of the Andes and the plains of the Amazon basin. Since there are no functioning land-use plans or administrations, little can be done to halt the advance of agriculture.

The population is, however, becoming more and more interested in environmental issues. An environment ministry was set up in May 2008, inter alia with German support. When weighing economic and ecological interests, the Minister of the Environ­ment is meeting with increasing public support for his position with respect to, for example, the fight against environmentally harmful mining practices. People are realising that Peru is one of the countries most severely affected by climate change in the region. Glacier melt in the Andes is endangering the coastal water supply.

Peru has signed the Kyoto Protocol, the Convention on Biological Diversity and the Montreal Protocol, among other agreements.

Priority areas of German cooperation with Peru

At the government negotiations in July 2010, Peru received pledges totalling 200.8 million euros for 2010 and 2011. Of this, 183 million euros is earmarked for Financial Cooperation and 17.8 million euros for Technical Cooperation.

Since the beginning of the two countries’ cooperation in the 1950s, the German government has made available about two billion euros to Peru in the context of bilateral development cooperation. In addition, repayment obligations under Financial Cooperation totalling more than 500 million euros have been rescheduled and in some cases cancelled. The Peruvian government has utilised the counterpart funds from debt conversion for pro-poor measures.

Along with the USA and Japan, Germany is one of the country's main bilateral donors. Development cooperation focuses on the following three priority areas agreed by the two governments:

  • Democracy, civil society, public administration

  • Water supply and sanitation

  • Sustainable rural development, including the conservation and sustainable management of natural resources.

In addition, in the context of climate protection, a project is being promoted in the field of renewable energies and energy efficiency, and there is a three-way cooperation initiative with Brazil on cross-border forest protection. Germany is also supporting reconstruction following the 2007 earthquake south of Lima and promoting, in a co-financing initiative with the Nether­lands, poor families’ access to energy.

In the framework of German development cooperation, Peru takes an active part in international and regional activities relating to future-oriented global issues such as tax reform, regional political and economic integration, renewable energies, innovative technologies and climate change.

Democracy, civil society, public administration

In the priority area "Democracy, civil society, public adminis­tration", German development cooperation contributed after the end of the authoritarian administration of President Fujimori (2000) to activities designed to help people work through their traumatic experience of terrorist and state violence, and to restore democratic, rule-of-law structures. Various programmes and projects are providing support to the Defensoría del Pueblo (Ombudsman), the Truth and Reconciliation Commission, the Court of Auditors, the registry office and reform of the criminal justice system, among others. The aim is to enhance trans­parency in public administration and to strengthen cooperation between state and civil society. Education and training activities for indigenous groups and young people are also being promoted, as are memory work projects. In this way Germany has in recent years made an effective contribution to improving the policy environment and strengthening social cohesion in Peru.

Decentralisation is being supported with the help of policy advisory services and under a programme-oriented joint financing initiative with the World Bank. The disbursement of funds is tied to the realisation of state reforms agreed in binding form with the Peruvian government.

At local level, communities receive advice on planning and financing their social and economic infrastructure.

On account of Germany’s major commitment to modernisation of state structures and decentralisation, the country has been tasked with leading the international donor round table for this area.

Water supply and sanitation

Children, water-tap, Peru. Copyright: Jürgen KernAccording to World Bank figures, 92 per cent of Peruvians have access to safe drinking water in the cities, but in the country­side only 63 per cent. Never­the­less, with the substantial efforts being made by the government, the Millennium Develop­ment Goals in this area are expected to be achieved. Sewage systems and, in particular, sewage treatment plants are not available everywhere. The municipal water supply and disposal utilities do not have the money to expand or maintain their networks.

Germany is helping the Peruvian government develop an appropriate legislative framework to regulate the sector. It is also providing support in the form of investments in the extension and restoration of water supply and sewage systems. In addition, water supply companies are receiving support to help them make technical improvements, introduce more efficient management, and reform their tariff systems. In addition, various training programmes are helping to strengthen companies’ institutional and human capacities.

In parallel with these measures, the public is to be sensitised to the problems caused by dirty water. Citizens will be required to help meet the costs of water supply and sanitation, while at the same time benefiting from a socially sound tariff system. The percentage of the population that now has access to safe drinking water, the number of hours for which water supplies are available every day and the percentage of wastewater properly disposed of and treated have been significantly increased. As a result of the work carried out under German development cooperation, access to water and sanitation has been improved so far for about 3 million people.

Sustainable rural development, and conservation and sustainable management of natural resources

Women in typical dress preparing food over an open fire.The poverty-related, un­con­trolled spread of agri­culture and logging poses a threat to Peru’s natural resources. In the priority area of "Sustain­able rural develop­ment", therefore, German cooperation focuses on promoting the sustainable utilisation of natural resources, natural resource protection and conservation of biodiversity.

The production, marketing and export of agricultural products are being promoted and small-scale irrigation plants built in order to enable farmers to attain higher yields and thus a higher income. Access to credit for small rural enterprises is also being improved. One important condition for the success of the measures is land-use planning that takes both users’ interests and nature conservation into account.

Some 15 per cent of the country now has designated protected-area status. Germany is supporting Peru in the management of protected areas, buffer zones and water catchment areas. Disaster risk management in rural areas is also an element of cooperation in this priority area.

German development cooperation also fosters the development of efficient and environmentally sound forest management in those parts of the country covered by tropical forests.

Germany also assists Peru with adaptation to climate change. The two countries are in regular dialogue on implementation of the Framework Convention on Climate Change (UNFCCC) and co-operate, inter alia, in the field of integrated water resources management.

Civil Peace Service

Through the Civil Peace Service, German development cooperation has helped people in Peru to work through the traumatic experiences of terrorist and state violence in the 1980s and 1990s. The Civil Peace Service works for conflict trans­formation and promotes measures that nurture and preserve peace for those who suffered most from the political violence. Cooperation with selected governmental and civil society institutions is helping to strengthen the rule of law in regard to human rights. One priority area is providing advice on the implementation of the state reparations plan in the Ayacucho region.

Within the context of civil conflict management and peace-building, the Civil Peace Service also makes important contributions to preventing or resolving environment- and resource-related conflicts between affected communities and mining companies, oil and gas companies and the timber industry, by providing advice to public and private partner organisations.

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