Peru

Abstract

AbstractAt least twenty-seven claims have been filed against Peru under international investment agreements (IIAs). Still, the government continues to deepen its legal commitments to foreign investors. This chapter addresses two related questions: why would a government deeply committed to investment protection attract so many claims? And why have these claims failed to generate more substantive reform efforts? It finds that weak institutions, corruption, and social opposition to investment projects underpinned cases of investor–state dispute settlement (ISDS). Peru has won more cases than it has lost and continues to attract foreign investment. Yet Peru’s preferences for strong investment protections and ISDS reflect more than just net benefits. Investor rights were embedded into the foundation of Peru’s legal system in the 1990s and maintained across changes in government by technocrats and economic elites who dominate reform debates. These actors have greater faith in the wealth-generating effects and redistributive benefits of market forces than of state intervention in the economy. They perceive few sovereignty costs in the agreements and interpret the state’s experience under IIAs in ways that reflect their preference for liberal investment markets. The narratives they construct about the causes and consequences of investor claims explain the state’s reform preferences.