Editing Alejandro Toledo (section)

== Presidency (2001–2006) ==
===High expectations===
During his campaign, Toledo promised Peruvians higher wages, a fight against poverty, anti-corruption measures, higher pensions, more employment, military reform, development of tourism, and industrialization. As [[Pedro Pablo Kuczynski]] noted "Toledo comes after almost 30 years of either dictatorships or governments that weren't so democratic. People expect Toledo to solve all the problems of the last 30 years, which included an enormous increase in relative poverty."<ref>"[http://www.newsweek.com/2005/02/28/pedro-pablo-kuczynski.html Pedro-Pablo Kuczynski.]" ''Newsweek''. 28 February 2005. Retrieved 27 June 2011.</ref> Toledo's inability to fulfill many of these promises created widespread dissatisfaction. His approval ratings were consistently low throughout his presidency, sometimes sinking into single digits.

Toledo also promised open market free trade reforms, which reflected Peru's business interests while also promising to review [[Fujimori's privatization programs]]. Specifically, Toledo promised not to privatize any of Peru's public utilities. This promise, combined with lofty promises of reduced unemployment and poverty, caused Peru's rank and file to set the bar very high for his administration. Shortly after coming to office Toledo met with IMF officials and promised that he would raise $700&nbsp;million in 2002, and almost one billion dollars in 2003, by selling state assets.<ref name="google">{{cite book|title=A History of Latin America|author1=Keen, B.|author2=Haynes, K.A.|date=2009|publisher=Houghton Mifflin Harcourt|isbn=9780618783182|url=https://books.google.com/books?id=_FVIOhdR9n8C|page=535|access-date=16 October 2014}}</ref>

To compound his problems, President Toledo faced a [[2001 southern Peru earthquake|devastating earthquake]] in his first year in office. This natural disaster left much of Peru morally and fiscally devastated. With many homes and businesses destroyed, economic ills were exacerbated.<ref name="google2006"/>

===''National Accord''===
In November 2001, Toledo opened talks which concluded in the National Accord of 22 July 2002. In the accord, seven political parties and seven social organizations agreed upon a framework that would guide policy for the next twenty years. The accord set forth twenty-four policy goals divided into four categories: democracy and the rule of law, [[equity (economics)|equity]] and [[social justice]], economic competitiveness, and an institutional framework of efficiency, transparency, and [[decentralization]]. Initially, the accord opened up dialogue in Peru's political arena, but within a year, the public considered it to be less effective than had been hoped.<ref name="autogenerated1">St. John, Ronald Bruce (2010). ''Toledo's Peru: Vision and Reality''</ref>

=== Indigenous issues ===
Touting his heritage throughout his campaign, Toledo continued the efforts begun by Paniagua, who had brought together experts and indigenous leaders to discuss the needs of indigenous people throughout the country. Toledo's inauguration ceremony on [[Machu Picchu]] was attended by all the presidents of the neighboring Andean states who joined him in signing the "Declaration of Machu Picchu," promising to protect indigenous rights.<ref name="Making Indigenous Citizens">García, Maria Elena (2005) [https://books.google.com/books?id=YO9SggUBoT0C&dq=alejandro+toledo&pg=PA55 ''Making Indigenous Citizens''] Retrieved 29 May 2011. {{ISBN|978-0-8047-5015-8}}</ref>

Maria Elena García calls the years of Toledo's presidency a transition ripe with new opportunities for indigenous people, noting the "reframed state-indigenous interactions", "increase in NGO projects and social movements", and "proliferation of indigenous organizations."<ref name="Making Indigenous Citizens"/> Toledo created and first lady [[Eliane Karp]] headed a new agency for indigenous and Afro-Peruvian affairs, CONOPA (Commission for Amazonian, Andean, and Afro-Peruvian Peoples). The agency was meant to establish a development agenda for indigenous communities, provide representation of indigenous interests within the government, and lead the way for multicultural constitutional reforms. Some critics viewed these actions as a state co-optation of indigenous identity, mockingly dubbing the agency the "Karp Commission".<ref>A. Kim Clark and Marc Becker (2007)[https://books.google.com/books?id=YNNpBW8xPkwC&q=toledo&pg=PA241 ''Highland Indians and the State in Modern Ecuador''] Retrieved 27 July 2011. {{ISBN|978-0-8229-4336-5}}</ref> However, [[Oxfam]]'s Martin Scurrah points out the agency's good work, noting that in addition to promoting a chapter on indigenous rights in the new constitution, Eliane Karp has "intervened on numerous occasions in support of or in defense of indigenous initiatives."<ref name="Making Indigenous Citizens"/>

As president, Toledo made it a priority to try to recover ancient Incan artifacts from Yale University's [[Peabody Museum of Natural History]]. Some art historians claimed that such artifacts, found at Machu Picchu, could help the Peruvian people to gain knowledge of their ancestry.

He also brought serious attention to bilingual education in indigenous schools, creating a new and well-staffed division within the Ministry of Education devoted to the issue. This effort gives advocates greater autonomy and opportunity to influence policy and work toward institutionalizing bilingual education.<ref>Anne Marie-deMejia (2005) [https://books.google.com/books?id=aNAhecncTBwC&dq=alejandro+toledo&pg=PA15 ''Bilingual Education in South America''], Retrieved 1 June 2011. {{ISBN|9781853598197}}/</ref>

Toledo's efforts at decentralization sought to give indigenous groups greater influence upon policy-making on a regional level. The first regional and local elections, held in November 2002, required that 15% of the candidates in regions with an indigenous presence must have indigenous backgrounds. However, decentralization has been viewed critically by some, who claim that in dividing up regions, administrators have at times ignored the distinctive cultural and historical factors that define different areas.<ref name="The Indigenous World 2002–2003">Diana Vinding (2003)[https://books.google.com/books?id=RomJxg75MZMC&q=toledo&pg=PA142 ''The Indigenous World 2002–2003''], Retrieved 30 May 2011. {{ISBN|978-87-90730-74-1}}</ref>

In a speech to the Human Rights of Indigenous Peoples in Latin America conference, Toledo expressed disappointment at the growing disparity between the incomes of indigenous people and other citizens. Despite the growth achieved by the Peruvian economy, the poverty gap has widened between the upper and lower classes. Toledo mentions the reintegration of the indigenous populations into the Peruvian social and political system as a key to sustainability and economic growth.<ref>{{cite web|last=Moore|first=Sarah|title=Former Peruvian President links ethnicity to poverty|url=http://cddrl.stanford.edu/news/former_peruvian_president_links_ethnicity_to_poverty_20120507/|work=article|publisher=Standord University|access-date=24 December 2012|archive-url=https://web.archive.org/web/20140311225511/http://cddrl.stanford.edu/news/former_peruvian_president_links_ethnicity_to_poverty_20120507/|archive-date=11 March 2014|url-status=dead}}</ref>

Advocates of indigenous rights have also criticized some of Toledo's efforts to jump-start the economy through investments, such as his support for the [[Camisea Gas Project|Camisea natural gas project]] and other projects that involved exploring or developing natural resources. These critics claim that companies buy land at unreasonable prices, force indigenous people off of land that is historically theirs, and exploit natural resources in ways that are harmful to communities and the environment. Peru is one of the largest producers of gold, silver, and zinc in Latin America, and some critics complain about the priority the Peruvian government gives to mining as opposed to industries like fishing and agriculture, with which indigenous peoples are more familiar. They note that mining companies may bring new jobs to rural areas, but that they are not jobs for which natives are well qualified.<ref name="The Indigenous World 2002–2003"/>

=== Labor unrest ===
Despite unprecedented, strong, and consistent economic growth under his leadership, Toledo dealt with much labor unrest during his presidency as workers demanded higher wages and the fulfillment of campaign promises. The crisis underlined a basic flaw in Peru's economy as pointed out by ''[[The Economist]]'', which noted that "some 70% of output falls within the grey or ''informal''" economy, and thus escapes tax. Tax-collections, at below 12.1% of GDP, are stagnant, with most coming from a handful of large, formal companies. Evasion is widespread, particularly among better-paid independent professionals." Tax collections by Toledo's government could simply not cover the wages that had been promised to civil servants.<ref>"[http://www.economist.com/node/1878504 Peru: Running Out of Options.]" ''The Economist'' 26 July 2005. Retrieved 27 June 2011</ref>

Even as the Peruvian government was taking in too little money to pay civil servants, the country saw its cost of living increase dramatically during the early years of Toledo's administration. These hardships, combined with increasing unemployment and stagnant wages caused the general public to doubt that Toledo was living up to lofty campaign promises. By 2003, Toledo's approval rating had fallen below 10%, the lowest of any South American president at the time.<ref>Sara Benson, Paul Hellander, and Rafael Wlodarski (2007) [https://books.google.com/books?id=INCgSn3BRwwC&dq=alejandro+toledo&pg=PA39 ''Peru'']. Retrieved 27 June 2011. {{ISBN|978-1-74059-749-4}}</ref>

=== Social initiatives ===
Toledo did implement some of his plans for investment in social infrastructure and institutions. The amount of paved roads increased by 20% during his presidency; medical attention to the poor doubled in rural areas, and public sector salaries increased (school teachers' pay rose by 87%) and over 100,000 new homes were built for poor Peruvians.<ref name="elcomercio.pe">"[http://elcomercio.pe/wikileaks-peru/146 Análisis sobre mensaje a la nación de Alejandro Toledo]" Retrieved 27 June 2011.</ref>

By 2004, Peru had a far-reaching [[social safety net]] that included food programs serving 35 percent of the population, and work programs offering temporary employment to unskilled workers. The Cooperative Fund for Social Development funded projects to construct and improve schools, health clinics, rural roads, water and sanitation systems, and electric grids. Toledo placed food and infrastructure programs under the Ministry for Women and Social Development and urged that municipalities implement decentralization. Social safety-net spending in Peru remained well below the Latin American average under Toledo even as it covered a larger percentage of the population, which means that outlays were insufficient to lift many people up out of poverty.<ref name="autogenerated1"/>

==== Education ====
Toledo inherited an educational system which had been plagued for decades by mediocrity, low completion rates, inadequate resources, and inequality between genders, classes, and races. Toledo launched Project Huascaran, which enabled primary and secondary-school classrooms to connect a nationwide computer network of learning systems. During his campaign, Toledo had promised to double teachers’ salaries, but ran into problems when the teachers unions successfully opposed an initiative to tie salary increases to improved skills and performance standards.
In 2002, Toledo declared an emergency in education, stating four objectives to respond to it:
* Reverse the deterioration in quality of education
* Give priority to basic education
* emphasize teacher training and performance
* evaluate and upgrade schools
Throughout his administration, enrollment rates in primary and secondary education remained high and private-school enrollment increased, but overall literacy and test scores improved only slightly. In an interview on his last day in office, Toledo expressed frustration that his administration had not done more to improve education.<ref name="autogenerated1"/>

==== Healthcare ====
During his first year in office, Toledo replaced previous health-insurance programs aimed at the poor with a more comprehensive free insurance program, {{Interlanguage link|Seguro Integral de Salud (Perú)|lt=Seguro Integral de Salud|es}} (SIS). The program aimed to provide Peruvians without health insurance with improved access to health care. By the end of his term, SIS covered more than 11&nbsp;million Peruvians living on the outskirts of cities or in rural areas. However, about a third of the country remained without health coverage.<ref name="autogenerated1"/>

The program has been immensely popular. [[Alan García|President García]] expanded the program, which has been praised by neoliberal reformers for extending coverage to indigenous people and women. They also note that it has addressed with considerable success the fact that Peruvian women's healthcare costs are much higher than men's owing to higher rates of illness and reproductive issues. The legislature continues to build upon SIS, using it as a basis for what many hope will someday be universal healthcare coverage for all Peruvians.<ref>Ewing, Christina (2010) [https://books.google.com/books?id=sbqGfzhkFvMC&q=sis&pg=PA162 ''Second-wave Neoliberalism: Gender, Race, and Health Sector Reform in Peru''], Retrieved 1 June 2011. {{ISBN|978-0-271-03711-0}}</ref>

Toledo also attempted to improve access to healthcare in the most remote places. His Juntos program awarded a monthly benefit to poor families who agreed to get vaccinations and screenings, attend school, and obtain birth registration documents. The Toledo administration also provided financial incentives to young doctors who were willing to spend the first few years of their practices in remote areas.<ref name="autogenerated1"/>

==== Housing ====
Peru faced a major housing deficit in 2001, with the majority of its urban population living in slums. Toledo's administration sought to improve access to affordable housing through subsidies, loans, down payments, land titling, and encouraging financial institutions to reach further down-market. Most of these efforts were grouped under the Fondo Mivivienda, which was a program started in 1999.<ref name="autogenerated1"/>

===Decentralization===
[[File:Tren Urbano Lima 4.jpg|thumb|left|President Toledo with Lima mayor [[Luis Castañeda Lossio]]]]
Under Toledo's predecessor, Fujimori, the governing authority in Peru was condensed and centralized. A Fujimori-dominated congress passed a new constitution in 1993, which consolidated the [[Bicameralism|bicameral legislature]] into a [[Unicameralism|unicameral legislature]] with a single national district. Under Fujimori local governments retained minimal legal authority including fees for utilities, basic civil registries, and management of public spaces and markets.

Decentralization was among Toledo's most successful institutional reforms. In addition to announcing regional elections upon his inauguration, he charged a Decentralization and Regionalization Commission with developing proposals. In 2002, a constitutional amendment was approved which established three levels of government: local, regional, and national. Over the next few years, the congress gradually passed on resources and responsibilities to the regional and municipal governments including food programs, social development projects, and health and education programs.<ref name="autogenerated1"/> He divided the single district up, called for regional elections, and eliminated the centralist Ministry of the Presidency that had been instituted under Fujimori.<ref name="google2">J. Tyler Dickovick (2011) [https://books.google.com/books?id=3hVQMaZ6FiYC&dq=alejandro+toledo+post+presidency&pg=PA151 ''Decentralization and Recentralization in the Developing World'']. Retrieved 29 June 2011. {{ISBN|978-0-271-03790-5}}</ref> However, when Peru Possible's rival political party APRA made significant gains in regional elections, the Toledo administration halted its decentralization program by withholding power in the areas of revenue and expenditure. This left many regionally elected governors confused as to how far their authority extended. Without strong fiscal plans to support his new policy of centralization, Toledo had to continue decentralizing power and recognizing more regions. Toledo continued to assert control of regional governments, however, by withholding funding.<ref name="google2"/>

Toledo's plan for decentralization enjoyed widespread popular support. Most of the opposition to his program came from, and most of the difficulty in implementing his proposals was owing to, politicians and bureaucratic agencies who were accustomed to a centralized form of government.<ref name="autogenerated1"/>

===Fighting terrorism and drug trafficking===
The Truth and Reconciliation Commission, which had been implemented by interim president Paniagua, was tasked with examining largescale acts of violence and atrocities committed within Peru between 1980 and 2000, to assess responsibility and pave the way for reparations. The commission's final report to President Toledo was issued in 2003, and concluded that approximately 69,000 people had been killed by the Shining Path and other extremist groups, the bulk of the victims being innocent peasants.<ref>Barret, Pam (2005) [https://books.google.com/books?id=aUWThg8JWTIC&dq=alejandro+toledo+truth+and+reconciliation+commission&pg=PA72 Peru]. Retrieved 27 June 2011. {{ISBN|978-981-234-808-1}}</ref> In January of that year, the [[Constitutional Court of Peru|Constitutional Court]] repealed several anti-terrorism measures enacted during Fujimori's administration.<ref name="eluniverso">{{cite web|url=http://www.eluniverso.com/2003/01/04/0001/14/08055D28C90D46AC8417AEE8A1480BEA.html|title=Máxima corte peruana anuló leyes antiterroristas de Fujimori – ENE. 04, 2003 – Internacionales – Historicos – EL UNIVERSO|date=4 January 2003|publisher=eluniverso.com|access-date=16 October 2014}}</ref> It was estimated that 54% of these victims were killed by the extremist guerrilla group Shining Path, 30% by the Peruvian Military and police forces, and the rest were by rural or peasant self-defense militias.<ref>MacLean, Iain S. (2006) [https://books.google.com/books?id=FBKQ1NtSTnEC&dq=alejandro+toledo+truth+and+reconciliation+commission&pg=PA23 ''Reconciliation, Nations, and Churches in Latin America'']. Retrieved 27 June 2011. {{ISBN|978-0-7546-5030-0}}</ref> These investigations were financed by a portion of the US$360&nbsp;million discovered in foreign accounts which had been stolen by Fujimori officials.<ref name="google2006"/> Toledo wasted no time in pursuing suspected terrorists, arresting 199 of them in 2002 alone.<ref>Kohn, George C. (2007)[https://books.google.com/books?id=OIzreCGlHxIC&dq=alejandro+toledo&pg=PT422 ''Dictionary of Wars''], Retrieved 1 June 2011. {{ISBN|978-0-8160-6577-6}}</ref>

In late 2001, the Directorate against Terrorism reported that the [[Shining Path]], a terrorist movement which has been active since the eighties, was organizing along new fronts and infiltrating protests, blocking highways, and organizing student marches. The government reacted by reestablishing five counterinsurgency bases, which soon assisted in destroying six Shining Path camps. But terrorist activity continued and in 2003, Toledo declared the first of several states of emergency due to the terrorist threat.

Toledo walked a thin line in responding to both U.S. pressure to severely limit coca-production and protests by coca farmers against the eradication of coca production in poor, rural areas, where the majority of the population is involved in that business. The presumed link between the Shining Path and narcotics trafficking was unclear, because the coca farmers gave most of their crops to drug traffickers who then paid the Shining Path to operate within certain regions.

Recognizing the drug trade as a threat to regional security, Toledo sought to create a common Andean approach to the drug war. He saw that revenue from drug trafficking funded terrorist activities, but also that U.S. insistence on the eradication of coca crops failed to address the problem. Alternative crop programs were also being resisted by coca farmers who depended on the coca trade for their livelihood. At a meeting of the 19-member Rio group in May 2003, Toledo proposed developing a joint strategy to deal with drug trafficking, but pressure from Washington, which preferred bilateral efforts, helped kill the notion.<ref name="autogenerated1"/>

=== Foreign relations ===
[[File:Bachelet Jefes Estado.jpeg|thumb|230px|Toledo in Valparaíso, Chile]]
The Toledo administration was unusually active in foreign policy. Its major goals were promoting democracy outside Peru, addressing the struggle against poverty, encouraging economic development in the borderlands, reducing arms spending in the region, strengthening relations with Asia-Pacific countries, and integrating with the [[Andean Community of Nations]].<ref name="autogenerated1"/> Peru also became an associate member of [[MERCOSUR]], a free trade zone that would be established gradually. The objective was for signing nations to gradually build up an infrastructure that would ease trade with one another, to cooperate in the improvement of energy efficiency, and to commit to future agreements that would increase cross border investment by eliminating double taxation.<ref>O'Keefe, Thomas Andrew (2009) Latin American and Caribbean trade agreements: keys to a prosperous community of the Americas. Retrieved 29 June 2011. {{ISBN|978-90-04-16488-8}}</ref>

====Asia====
The Toledo administration held free trade agreement talks with Singapore and Thailand, came to an agreement with Thailand on air transport, and signed an extradition treaty with South Korea. Foreign Minister García-Sayan visited China and discussed support for multilateralism and strengthening the UN. In 2004 China declared Peru an official tourist destination, and in 2005 the countries concluded several trade agreements.<ref name="autogenerated1"/>

====Bolivia====
Toledo attended [[Evo Morales]]’ inauguration in 2006, indicating a willingness to work with his administration, but Morales joined his mentor, [[Hugo Chávez]], in repeatedly making offensive comments about Toledo and his government, especially after the successful conclusion of [[Peru's free trade agreement with the U.S.]], which soured official relations with Colombia.<ref name="autogenerated1"/>

====Brazil====
[[File:Lula e Alejandro Toledo.jpeg|thumb|Toledo and Brazil's President [[Lula da Silva]].]]
In conducting Peru's relations with Brazil, Toledo's goal was to reorient Peru from the Andean Community, toward the more economically active Brazil and MERCOSUR. In August 2003, Toledo met with former Brazilian president Lula. They committed to increased political and economic cooperation under the Initiative for Integration of Regional Infrastructure in South America which invests in large-scale, debt-heavy projects, aimed at developing 10 economic axes or hubs throughout South America. Construction projects, including roads, discussed. President Lula also agreed to allow Peru access to two surveillance systems which Brazil had developed in the Amazon Basin to target legal and illegal activity.<ref name="autogenerated1"/>

====Colombia====
Concern for security and trafficking led the Toledo administration to prioritize the reinforcement of its border with Colombia and the improvement of police coordination. In 2003, with increased private and UN investment in the area, the two countries agreed to establish an integrated frontier zone which treats air travel between border cities as domestic travel and simplifies customs and tariff procedures.<ref name="autogenerated1"/>

====Chile====
Most of the Toledo administration's dealings with Chile involved concern over the latters procurement of arms. Despite Toledo's repeated call for regional arms reductions, Chile continued purchasing arms, including 10 [[F-16 fighters]] from the U.S. and one hundred [[Leopard 2 tank]]s from Germany.<ref name="autogenerated1"/>

====Ecuador====
While Peru and Ecuador had been at peace for years, President Toledo worked to solidify and build upon that peace. During a 2001 visit to Ecuador, Toledo expressed support for the Brasília Accords, agreed to the demilitarization of the two countries’ common border, advocated reduced military spending, and agreed to greater energy, transportation, and police cooperation. Toledo joined Ecuadorian President Noboa at the International Advisory Committee of the Binational Development Plan, where they called for greater investment in their region, with Toledo putting forth a detailed program for international assistance. Economic activity in the region subsequently improved as the demining of the border continued, construction projects were completed, and military forces were reduced. By 2006, investment in the area had reached $1.2&nbsp;billion.<ref name="autogenerated1"/>

====Venezuela====

Relations with Venezuela deteriorated during the latter half of the Toledo presidency owing to opposing philosophies and policies of presidents Toledo and Chávez. The issues contributing to the tension between the two countries included Venezuela's alleged shielding of Vladimiro Montesinos,<ref name="MOntesinos - NYT">[https://www.nytimes.com/2001/06/25/world/25CND-PERU.html Former Spy Chief Returned to Peru After Being Captured]</ref> and Venezuelan interference in Peruvian politics. (157) This included Chávez's official endorsement, and unofficial financial backing of leftist candidate Ollanta Humala in Peru's 2006 presidential race, which was soon seconded by President Morales.<ref name="autogenerated1"/>

====United States====
President Toledo worked hard throughout his presidency on what became a very productive relationship with the U.S., and what Toledo described as a personal friendship with President Bush. He received lavish praise from the American president for his economic and domestic security policies. During a visit to Peru, Bush announced the establishment of an Andean Center of Excellence for Teacher Training, with a base in Peru, and a fellowship program to give Andean professionals access to education in information technology. In June 2002, the U.S. agreed to forgive $14&nbsp;million of Peru's debt in exchange for a promise to invest $12&nbsp;million in conservation projects. In September, Toledo secured a $300&nbsp;million commitment from Bush to fund alternative-crop development in coca-producing areas. In 2003, the Peace Corps returned to Peru.
Peru opposed U.S. efforts most visibly in the War in Iraq, refusing to support the intervention in any international arena.<ref name="autogenerated1"/>

=====Peru – United States Trade Promotion Agreement=====
{{Main|United States – Peru Trade Promotion Agreement}}

The ''[[United States – Peru Trade Promotion Agreement]]'' ({{langx|es|link=no|Tratado de Libre Comercio Perú – Estados Unidos}}) is a bilateral [[free trade agreement]], whose objectives are eliminating obstacles to trade, consolidating access to goods and services and fostering private investment in and between the United States and [[Peru]]. Besides commercial issues, it incorporates economic, institutional, intellectual property, [[Labor relations|labor]] and [[environmental policy|environmental policies]], among others. The agreement was signed on 12 April 2006; ratified by the [[Congress of Peru|Peruvian Congress]] on 28 June 2006; by the [[United States House of Representatives|U.S. House of Representatives]] on 2 November 2007, and by the [[United States Senate|U.S. Senate]] on 4 December 2007. The agreement was implemented on 1 February 2009.<ref>{{cite web|url= http://edocket.access.gpo.gov/2009/pdf/E9-1573.pdf |archive-url=https://ghostarchive.org/archive/20221009/http://edocket.access.gpo.gov/2009/pdf/E9-1573.pdf |archive-date=9 October 2022 |url-status=live |title=Presidential Proclamation 8341—To Implement The United States-Peru Trade Promotion Agreement And for Other Purposes }}, published at 74 FR 4105, 22 January 2009</ref>

Peru looks to the agreement are to:
*Consolidate and extend the trade preferences under ATPDEA
*Attract foreign investment
*Generate employment
*Enhance the country's competitiveness within the region
*Increase workers' income
*Curb poverty levels
*Create and export sugar cane [[ethanol fuel|ethanol]]<ref>E85.whipnet.net, [http://e85.whipnet.net/news/sugar.cane.html Peruvian Desert to Host Ethanol Production Facility]. February 2007. Retrieved on 30 November 2007.</ref>

The United States looks to the agreement to:
*Improve access to goods and services
*Strengthen its investments
*Promote security and democracy
*Fight against drug trafficking

The U.S.-Peru agreement has faced criticism. In Peru, the treaty was championed by Toledo, and supported to different extents by former President [[Alan García]] and candidates [[Lourdes Flores]] and [[Valentín Paniagua]]. Current President [[Ollanta Humala]] has been its most vocal critic. Humala's [[Union for Peru]] won 45 of 120 seats in Congress in 2006, the largest share by a single party, prompting debate on ratification of the agreement before the new legislature was sworn in. Some Congressmen-elect interrupted the debate after forcibly entering Congress in an attempt to stop the agreement ratification.<ref>[http://news.bbc.co.uk/2/hi/americas/5125852.stm "Peru Ratifies US Free Trade Deal"] 28 June 2006. ''BBC News''. Retrieved 29 June 2011.</ref>

One controversial element of the agreement relates to land resources. Laura Carlsen, of the Center for International Policy, who is also a contributor to Foreign Policy in Focus notes that "Indigenous organizations warn that this ruling effectively opens up 45&nbsp;million hectares to foreign investment and timber, oil, and mining exploitation."<ref>[Trade Agreement Kills Amazon Indians {{cite web|url=http://www.fpif.org/fpiftxt/6200 |title=Foreign Policy in Focus &#124; Trade Agreement Kills Amazon Indians |access-date=20 May 2011 |url-status=dead |archive-url=https://web.archive.org/web/20090910085627/http://www.fpif.org/fpiftxt/6200 |archive-date=10 September 2009 }}]</ref>

However, most of the criticism of the agreement has focused on its potential impact on Peru's agricultural sector. By planting crops to similar to those subsidized by the U.S., Peru faced a competitive disadvantage in the production of agricultural products because poor farming families with inadequate tools, technology and techniques may not be able to produce crops at low enough prices to export. In response to these concerns, Peruvian lawmakers created a Compensation Fund which directed $34&nbsp;million per year to cotton, maize/corn, and wheat producers for a five-year period to help them adjust to the new competitive pressures.<ref>[http://www.lexis.com/research/retrieve?cc=&pushme=1&tmpFBSel=sel&totaldocs=&taggedDocs=Z3%3ACZ1%3A9Z4%3A1Z2%3A&toggleValue=&numDocsChked=5&prefFBSel=0&delformat=XCITE&fpDocs=&fpNodeId=&fpCiteReq=&expNewLead=id%3D%22expandedNewLead%22&brand=ldc&dedupeOption=0&T13=13&T14=14&T21=21&T24=24&T44=44&_m=b25310ca06c95e5101aed43f0564638e&docnum=13&_fmtstr=FULL&_startdoc=1&wchp=dGLzVtz-zSkAb&_md5=8b3fa70e011f0b65909af1841603d9c7&focBudTerms=&focBudSel=sel "Peruvian Congress Passes U.S. Free-Trade Pact"]{{Dead link|date=February 2020 |bot=InternetArchiveBot |fix-attempted=yes }}, Retrieved May 2011</ref>

=== Economic policy ===
[[File:Alejandro Toledo DAVOS2003.jpg|thumb|right|Toledo speaks in [[Davos]], 21 January 2003.]]
Toledo's economic policies can be described as neoliberal or strongly pro free-trade. He inherited a national economy which in the previous decade had experienced an unstable GDP with periods of growth and shrinkage, as well as fiscal deficits frequently amounting to over 2% of GDP. Inflation had not dropped below 23% until 1995 and was still feared by many. In response, Toledo developed policies which focused on fighting poverty, generating employment, decentralizing government, and modernizing the state.<ref name="google3">{{cite book|title=Peru's Relations with Pacific Asia: Democracy and Foreign Policy Under Alan Garcia, Alberto Fujimori, and Alejandro Toledo|author=Mann, S.|date=2006|publisher=Lit|isbn=9783825888206|url=https://books.google.com/books?id=eC7D_m1KTV4C|access-date=16 October 2014}}</ref>

Among Toledo's initiatives designed to generate revenue and transform the economy were plans to privatize national industries. The first major effort of this kind was the $167&nbsp;million sale of two state-owned electric companies. Protests in the city of Arequipa turned violent as Peruvians reacted with anger to the prospect of layoffs and higher priced electricity. They also recalled that billions of dollars earned from privatization under the Fujimori administration had ended up filling the president's personal bank accounts. Toledo decided not to carry out the sale of electric companies, but promised to continue privatization efforts, which were a key provision of a deal struck with the [[International Monetary Fund]]. Toledo had promised to bring in US$700&nbsp;million through privatization in 2001 and US$1&nbsp;billion in 2002.<ref>Forero, Juan "Peruvians Riot Over the Planned Sale of 2 Regional Power Plants" ''The New York Times''18, June 2002. Retrieved 27, June 2011</ref> Although he failed to meet these goals, the IMF approved a $154&nbsp;million disbursement to Peru in December 2002 and allowed the country to raise the fiscal deficit target in its agreement.<ref name="Americas Review 2003/2004"> Page, Kogan (2003)[https://books.google.com/books?id=5SpfhmFHyjwC&q=toledo&pg=PA140 Americas Review 2003/2004], Retrieved May 2011. {{ISBN|978-0-7494-4064-0}}</ref>

Although Toledo originally promised tax cuts, violent protests by civil servants prompted the increase in social sector spending that Toledo had also promised, which necessitated tax increases. To tackle tax reform in June 2003, he brought in Peru's first female prime minister, Beatriz Merino who quickly submitted proposals to the congress. Among the suggestions were pay cuts for higher-paid public-sector officials, including a 30% salary reduction for Toledo himself, a 5% across-the-board cut for all agencies and ministries, tax increases on beer, cigarettes and fuel, and an extension of the 18% sales and value-added tax to, among other things, long-distance bus journeys and live entertainment.<ref name="lexis">{{cite web|url=http://www.lexis.com/research/retrieve?cc=&pushme=1&tmpFBSel=all&totaldocs=&taggedDocs=&toggleValue=&numDocsChked=0&prefFBSel=0&delformat=XCITE&fpDocs=&fpNodeId=&fpCiteReq=&expNewLead=0&brand=ldc&dedupeOption=1&_m=a7232be08d3d2f19d719de08eff2dd15&docnum=32&_fmtstr=FULL&_startdoc=1&wchp=dGLzVlz-zSkAA&_md5=64736bfdd4fa82638b73ad31fea842b9&focBudTerms=&focBudSel=all |title=Redirecting |publisher=lexis.com |access-date=16 October 2014 }}{{dead link|date=June 2017 |bot=InternetArchiveBot |fix-attempted=yes }}</ref> The final package also included the elimination of tax breaks, the introduction of a minimum corporate tax, the closing of tax loopholes for the rich, and the strengthening of local government realestate tax regimes.<ref name="Americas Review 2003/2004"/>

During Toledo's five years as president, Peru's economy experienced 47 consecutive months of growth and grew at an average rate of 6% per year while inflation averaged 1.5% and the deficit sank as low as 0.2% of GDP. Between 2004 and 2006, employment grew at an average rate of 6%,<ref name="fsi.stanford.edu"/> the percentage of people living in poverty fell, and food consumption by the poorest segments of the population rose dramatically.<ref name="elcomercio.pe"/> Much of this growth has been credited to the free trade agreements signed with the United States, China, Thailand, Chile, Mexico, and Singapore.<ref name="ustr">{{cite web|url=http://www.ustr.gov/trade-agreements/free-trade-agreements/peru-tpa|title=Peru Trade Promotion Agreement &#124; Office of the United States Trade Representative|publisher=ustr.gov|access-date=16 October 2014}}</ref><ref>[[China–Peru Free Trade Agreement]]</ref>

In an attempt to increase remittances from Peruvians abroad, the Ministry of Foreign Affairs under Toledo sought to strengthen the link between Peruvian migrants and their homeland through the creation of advisory councils. The issue is especially important for a country which experienced a massive emigration of professionals under Fujimori and which still has 10% of its population living abroad. The councils were also part of an effort by the first Minister of Foreign Affairs, García Sayan, to professionalize the foreign service.<ref>Goldring, Luin (2007) [https://books.google.com/books?id=Jqhlsg5DKBkC&dq=alejandro+toledo&pg=PA245 ''Organizing the Transnational: Labor, Politics, and Social Change''], Retrieved 3 June 2011. {{ISBN|978-0-7748-1407-2}}</ref>