Peru lies on the northwest coast of South America. Its western coastal plains and eastern tropical lowlands areseparateddown its middle by the rugged Andes Mountains. Three times the size of California, it has a population of 25million,72% of which live in urban areas. Over 7 million people live in and around the capital of Lima. Official languagesareSpanish and Quechua; a number of other Indian languages are spoken as well. The population is 45% Indian, 37%mestizo(or mixed Indian- and European-descent), 15% white, and 3% black, Japanese, Chinese, and other groups. Peru is a country of medium human development, according to the United Nations' Development Programme (UNDP),based on three socioeconomic indicators: longevity, educational attainment, and standard of living. Life expectancyin Peruis 68.6 years (compared to 76.8 years in the United States). The adult literacy rate is 89.2%. GDP per capita in 1999was$2,611. Although economic conditions have improved over the last five years, there is still extensive poverty inPeru. Asizeable portion of the population - 49% - live below the national poverty line. Thirty-three percent of thepopulationlacks access to safe water. Twenty-eight percent lack access to sanitation. There is a broad gap in incomedistribution inPeru. The richest 20% of the population account for over half (51.2%) of the nation's income or consumption. Thepoorest20% account for only 4.4% of income or consumption. (1) Peru has a free market economy. Among the reforms implemented by the Fujimori government (1990-2000) were awide-ranging privatization program; simplification and strengthening of the tax system; lowering of tariffs; and theopeningof Peru to foreign investment. The United States is Peru's largest trading partner; in 1999, the United Statesexported about$1.6 billion to Peru. Peru is a member of the Andean Community and the Latin American Integration Association,withwhose members it shares duty-free access on many products. In 1998, the Andean Community agreed to establisha freetrade area with MERCOSUR, the Southern Cone Common Market, after the year 2000. Peru signed a Free TradeAgreement with Chile in 1998, to be implemented over several years, and is negotiating one with Mexico as well. Basic elements of a democracy include effective and independent legislative and judicial branches ofgovernment, freedomof expression, respect for human rights, and free elections. A broad array of organizations, both domestic andinternational,criticized Fujimori throughout his decade in power for impeding the development of these democratic elements. Fujimori effectively controlled both the legislature and judiciary, inhibiting the development of either as independentdemocratic institutions. In 1999 and 2000, Freedom House classified Peru as the only country in the hemisphere,besidesCuba, where the press was "not free." A State Department Human Rights report, released in February 2000, saidthatalthough human rights abuses had decreased in several areas, the Fujimori "Government's human rights record waspoor inseveral areas," including the protection of civil and political rights. The latest elections held in Peru, in April andMay,2000, were deemed by international and Peruvian observers to have been neither free nor fair. That controversy,combinedwith the revelation of high-level corruption in his administration led Fujimori first to agree to new presidentialelections inwhich he would not run, and then to flee to Japan and resign in November 2000. Under the constitution's rules of succession, the president of the Congress, Valentin Paniagua, became Peru's newpresident. The immediate challenge facing the interim government was to organize the extraordinary elections, heldonApril 8, 2001, with a presidential run-off held on June 3. The Toledo administration faces the more long-termchallenge ofmaintaining stability in Peru while trying to strengthen democratic institutions weakened by 10 years of ademocraticallyelected, but autocratically run, government. Erosion of Democratic Institutions under Fujimori. Most analystsacknowledge that in some major areas Fujimori brought greater stability to Peru. He did much to bring undercontroldestabilizing factors such as terrorism, drug trafficking, hyperinflation, and border disputes. But Fujimori also ledthecountry into several constitutional crises. He was elected in 1990 under a constitution which limited presidents toservingone 5-year term. In 1992, in what became known as a "self-coup," Fujimori dissolved Congress and took controlof thejudiciary. Under intense domestic and international pressure, Fujimori then oversaw the drafting of a newconstitution thatwent into effect in 1993, and scheduled elections. The new constitution allowed a president to serve two consecutivetermsand established a unicameral legislation. Fujimori ran again in 1995, and won a second 5-year term. He quickly began paving the way for yet another term, furthereroding the independence of Peru's already weak democratic institutions as he did so. In 1996, the unicamerallegislature,dominated by a pro-Fujimori majority, passed a "Law of Authentic Interpretation" which stated that Fujimori'selectionunder the previous constitution did not count against the two-term limit of the current constitution. In 1997, theConstitutional Tribunal, a high court charged with deciding the constitutionality of laws, issued an opinion that theLaw ofAuthentic Interpretation was not applicable. The Peruvian Congress dismissed the three members of the court whosignedthe opinion (the other four members abstained), rendering the court unable to act. The Congress also thwarted aneffort bycivic organizations to put the matter of a third term to a national referendum, voting against allowing it, even thoughpetitioners gathered 1.4 million signatures - more than the 10% of registered voters required to do so. The ability of Peruvian citizens to challenge such actions was further limited by the inability of the Constitutional Tribunalto act, and by Fujimori's withdrawal of Peru from the jurisdiction of the Inter-American Court for Human Rights. Fujimoriwithdrew from the court after the Inter-American Commission on Human Rights recommended in 1998 that Perureinstatethe three dismissed justices and restore the Tribunal's power to rule on constitutional issues. Fujimori's governmentannounced it would not comply with the recommendation. Elections of 2000. (2) Having cleared away obstacles to his candidacy,Fujimori ran for an unprecedented third term. All 120 seats of the unicameral legislature were contested along withthepresidency. Many observers believed that electoral conditions did not represent a "level playing field" but anenvironmentthat heavily, and often unfairly, favored the incumbent. Numerous Peruvian and international election monitoringorganizations and press reports indicated several areas of concern: the executive branch's manipulation of thejudicialsystem to achieve its desired outcome; questions regarding the independence and impartiality of the electoral bodiesresponsible for organizing Peru's elections, and use of public resources for campaign purposes. Concerns regardingfreedom of the press and access to information involved unequal media access, media bias, and harassment ofcandidatesand domestic election observers. Two weeks before the April 9, 2000 elections, an international delegation to Peruorganized by the National Democratic Institute for International Affairs (NDI) and the Carter Center stated that,"Theconditions for a fair election campaign have not been established. Irreparable damage to the integrity of the electionprocess has already been done...". (3) The first round of elections was followed by three tense days of delayed results, widespread suspicion of fraud, and publicprotests. After international observers said they would not validate a first-round victory by President Fujimori, Peruannounced there would be a second round of elections on May 28, though election officials denied there was anyconnection between the two acts. Election officials said Fujimori won 49.8% of the vote, and Alejandro Toledo40.31%.More than 50% of the vote is needed to win in the first round. As the second round election approached, both Peruvian and international observers reported that conditions for a free andfair election still did not exist. The Peruvian monitoring organization, Transparencia, and the Organization ofAmericanStates (OAS) observer mission withdrew from monitoring the week before the runoff. Toledo withdrew as acandidatefrom the race. Fujimori denied requests from both organizations and Toledo to delay the vote in order to resolveirregularities. Official results showed Fujimori winning the election, with 51.2% of the votes cast. Toledo hadcalled onvoters to either boycott the vote or spoil their ballots; almost 30% of ballots were spoiled, and Toledo still received17.7%of the vote even though he had withdrawn from the race. Fujimori's Fall. The United States pressed for regional sanctions, butthe OAS sent a high-level mission to press Peru for democratic reforms instead. An OAS permanent office was setup inPeru to oversee reforms and mediate a dialogue between the Fujimori government and elements of civic society,includingopposition parties. Decreased support for Fujimori, and corruption and human rights scandals involving Fujimori'stopaide, Vladimiro Montesinos, led Fujimori to agree to new elections in April 2001, in which he would not run. On November 16, 2000, a group of opposition parties took over the presidency of the 120-member legislature for the firsttime since Fujimori suspended Congress in 1992.