Instead, widespread social unrest has increased as growing inflation combines with anger that social conditions for Peru's poorest people have not improved with Peru's remarkable economic growth over the past eight years. Now, in the third year of his five-year term, President García is facing the worst crisis of his presidency to date. On June 5, 2009, the unrest exploded into a deadly conflict when the government sent police to break up blockades set up by thousands of indigenous protesters in the Amazon. Protests and Exploitation of Natural Resources

The deadly clash between indigenous protesters and police, and the reaction to it, is indicative of the polarization both within Peru and within the Andean region. The protest stems from disputes over who has the right to exploit natural resources in the Amazon and elsewhere in the country. The fallout from the protests has also heightened regional tensions over how to reduce poverty and the nature of the region's foreign relations. García's ability to govern effectively may continue to be challenged by ongoing political unrest. Conviction of Former President Alberto Fujimori

In a landmark legal case, on April 7, 2009, former President Fujimori was convicted and sentenced to 25 years in prison for "crimes against humanity," on charges of corruption and human rights abuses, including authorizing killings by an army death squad and the abduction of a journalist and a businessman. Analysts also regard it as a considerable accomplishment for Peru's judicial system, which has been considered weak and subject to political influence. Economic Issues

Peru's economy has been stronger than virtually all other Latin American economies since 2001. While Peru's sound public finances and cushion of foreign reserves can help offset damage from the global financial crisis, its institutional weaknesses could limit the effectiveness of economic stimulus measures. Peru's poverty rates have been dropping since 2000. Indeed, the percentage of the population living in poverty in cities in 2007 was about 26%, while the percentage living in poverty in rural areas was about 65%. Economic power has been traditionally, and remains, concentrated in the hands of a small economic elite of European descent. The subsistence sector, on the other hand, is concentrated in the mountainous interior, and among the mostly indigenous population there. The Peruvian government's ability to carry out poverty reduction programs is somewhat limited by its institutional capacity. Nonetheless, as the world economic downturn leads to a dramatic slowing of Peru's economic growth, this weak institutional capacity may also hinder the government's ability to implement responsive economic policies effectively. Relations with the United States

Peru and the United States have a strong and cooperative relationship. The United States supports the strengthening of Peru's democratic institutions and respect for human rights. The United States and Peru signed the U.S.-Peru Trade Promotion Agreement (PTPA) in April 2006. Terrorism17

Peru's main concern regarding terrorism is containing the violent guerrilla movement Sendero Luminoso, or Shining Path. It has reemerged in recent years, now linked to drug-trafficking.
Peru shows promising signs of economic and political stability and the inclination to work with the United States on mutual concerns. President Alan García is, however facing challenging times during this, the third year of his five-year term. Widespread social unrest has increased as growing inflation combines with unmet expectations that social conditions for Peru's poorest citizens would improve with Peru's economic growth. Peru's economy has been stronger than virtually all other Latin American economies since 2001. Peru's poverty rates have been dropping since 2000, but still remain high considering Peru's income levels. Economic power is, and has been traditionally, concentrated in the hands of a small economic elite of European descent. The subsistence sector, on the other hand, is concentrated in the mountainous interior, and among the mostly indigenous population there. Indeed, the percentage of the population living in poverty in cities in 2007 was about 26%, while the percentage living in poverty in rural areas was about 65%.
On June 5, 2009, unrest exploded into a deadly conflict when the government sent police to break up blockades set up by thousands of indigenous protesters in the Amazon. The deadly clash between the indigenous protesters and police, and the reaction to it, is indicative of the polarization both within Peru and within the Andean region. The protest stemmed from disputes over who has the right to exploit natural resources in the Amazon and elsewhere in the country. The fallout from the protests has also heightened regional tensions over how to reduce poverty and the nature of foreign relations.
While Peru's sound public finances can help offset damage from the global financial crisis, its institutional weaknesses may limit the effectiveness of economic stimulus measures and the Peruvian government's ability to carry out poverty reduction programs. As the world economic downturn leads to a dramatic slowing of Peru's economic growth, this weak institutional capacity may also hinder the government's ability to implement responsive economic policies effectively. The García Administration's ability to govern may continue to be challenged by ongoing political unrest.
The violent guerrilla movement Sendero Luminoso, or Shining Path, which helped drive Peru to the brink of collapse during García's first presidency (1985-1990), has reemerged in recent years, now linked to drug-trafficking.
On a more positive note, in a landmark legal case, on April 7, 2009, former President Fujimori was convicted and sentenced to 25 years in prison for "crimes against humanity," on charges of corruption and human rights abuses. Analysts regard the court's decision as a considerable accomplishment for Peru's judicial system, which has been considered weak and subject to political influence.
Peru and the United States have a strong and cooperative relationship. The United States supports the strengthening of Peru's democratic institutions and respect for human rights. A U.S.-Peru Trade Promotion Agreement (PTPA) went into effect on February 1, 2009. The two countries also cooperate on counter-narcotics efforts, maritime concerns, combating human trafficking, and improving disaster preparedness.