TRADE AND INVESTMENT BETWEEN PERU AND THE U.S. 126 9. TRADE AND INVESTMENT BETWEEN PERU AND THE UNITED STATES

The relationship between Peru and the United States has undergone a wide range of political and economic circumstances in the last twenty-five years, some of them rather difficult. In the first half of the 1970s, under the socialist military regime of General Velasco (1969-1975), the bilateral relationship reached one of its lowest points of this century. This period was marked by bilateral tension, especially after the nationalization of the International Petroleum Company that took place shortly after the military coup that brought Velasco to power. Entrepreneurial confidence was so low that even when effective protection was raised to promote selected economic sectors, U.S. corporations such as Ford and General Motors left the country. While the Morales Bermúdez (1975-1980) and Belaúnde (1980-1985) administrations were friendlier to the United States, this was not enough to attract U.S. direct investment, not only because macroeconomic policy was not adequate, but because the whole Latin American region was still under turmoil. The worst came with García (1985-1990), whose populist policies and administrative mismanagement brought about hyperinflation, international financial isolation, widespread corruption and the escalation of terrorism. García’s anti-American rhetoric further deteriorated the political and economic relationship with the United States. It was only under the Fujimori administration, which started in 1990 and introduced market-oriented policies and economic discipline, that a softening of political and economic tensions took place. Thus, 1990 marked the beginning of a stable an