Two centuries ago, Italian explorer Antonio Raimondi wrote that Peru is like a 'beggar seated on a bench of gold'. Today, nearly half the population lives on less than two dollars a day despite billion-dollar mining, oil and natural-gas extraction. But Raimondi's ancient and cynical metaphor does

not reflect the creativity and strength flowing through Peru's shanty towns and peasant communities. In the small mango-growing town of Tambogrande, for example, residents who are literally seated atop a multi-mineral deposit worth billions have mounted a spirited campaign to keep out transnational mining interests -- and inspired others across the country.

Peruvian schoolchildren learn that the Inca ruler Atahualpa was assassinated for gold and silver to satisfy Spanish greed, The new rush on Peru's natural resources, however, is very recent. A protectionist military government in the late 1960s and 19705, followed by a 15-year armed conflict with left-wing guerrilla groups and rampant hyper-inflation, made Peru a virtual pariah for foreign investors.

Alberto Fujimori burst on to this scene with a surprise election win in 1990. Fujimori's anti-terrorist strategy, spearheaded by his personal advisor Vladimiro Montesinos, targeted all left-leaning organizations, regardless of whether they were affiliated with armed guerrilla groups. Montesinos founded an elite death squad to wipe out suspected terrorists and authorized massacres, disappearances and torture, By the time the state of emergency was lifted in the mid-19905, terrorism had been virtually eradicated - but so had any form of popular protest, including the once-mighty trade-union movement.

Fujimori quickly became the darling of the global financial establishment, privatizing state businesses for bargain-basement prices, loosening tax regulations and turning a blind eye to environmental laws. Once again foreigners flocked to Peru in search of a modern 'El Dorado'.

As the political elite in Lima grew richer, the smell of something rotten in government grew.

At first, Fujimori was able to distract the majority of the population by dressing up in traditional costumes, searching for giant anacondas in the jungle and 'personally directing' Rambostyle anti-terrorist operations. Few worried when Fujimori ousted his own government, rewrote the constitution to his liking and stacked the judiciary and military with Montesinos' close friends. But the end of terrorism meant the Government had to loosen restrictions on civil society, including students, who began demonstrating. When Fujimori won a third consecutive term amid allegations of fraud and foul play in 2000, citizens took to the streets en masse. Peru's civil society had been reborn.

Scant months later a series of corruption scandals linked to Montesinos (he is said to have swindled the country out of a billion dollars) became public and in November 2000 Fujimori fled to Japan, his parents' birthplace, and was removed from the presidency in disgrace. Democratic elections were held, won by Alejandro Toledo, a former shoe-shine boy turned Stanford economist.

Now President Toledo is being closely watched by the same forces that swept him to power -- Peru's newly awakened civil society and emergent free press. His early rule has been marked by angry protests from indigenous and peasant communities demanding control over their natural resources and lands. Instead of calming these tensions, Toledo has embraced his predecessor's neoliberal policies and made resource extraction the centrepiece of his economic plan.

Peru's wounds run deep. The conflict between government forces and guerrillas of the Maoist-aligned Shining Path and Tupac Amaru Revolutionary Movement left 30,000 Peruvians dead and another 600,000 displaced, The victims, mainly peasant farmers, indigenous peoples and urban poor, were ignored and forgotten until the creation of the Truth and Reconciliation Commission last year. This is collecting testimonies of human-rights abuses committed between 1980 and 2000 and has an estimated 180 mass graves to exhume. Hundreds of victims have come forward to testify and it seems that, at the very least, Peru's long years of silence and fear have been broken.

RELATED ARTICLE: AT A GLANCE

Leader: President Alejandro Toledo

Economy: GNP per Capita $2,100 (United States $34,260). Monetary unit: Nuevo Sol.

Main exports: Gold, fishmeal. Mining provides 40% of exports.

Main imports: Oil and gasoline, Peru exports raw crude oil then imports the refined product.

People: 25.7 million. 19 per square kilometre (Britain 23a). 72 per cent of the population is urban.

Health: Infant mortality is 40 per 1,000 live births (Bolivia 62, US 7). There are 10 doctors per 10,000 people,

Environment: The Amazon basin makes up 60% of Pew's land mass and still contains vast tracts of pristine rainforest despite widespread logging, gold mining and drilling for natural gas. The Andean mountain region suffers from uncontrolled mining activity and lax environmental monitoring.

Culture: 45% indigenous, 37% mestizo (mixed), 155 white, 3% Afro-Peruvian and other. The largest indigenous groups are Quechua- and Aymara-speaking peoples from the Andes. There are at least 65 ethnic groups in the Amazon region, where an estimated 6,500 are considered 'non-contacted (1).

Language: Spanish is the language of government and business. Traditional languages still spoken include Quechua, Aymara and numerous Amazon indigenous languages.

Religion: Predominantly Catholic. Evangelical sects are growing, especially among urban poor and Andean peasants.

Sources: State feet the World's Children 2002; Peru's National Institute of Statistics; Latinamerica Press; El Comercio.

Last profiled August 1990

STAR RATINGS

INCOME DISTRIBUTION *

The richest 10% of the population control 35.4% of the nation's wealth and the poorest 10% control just 1.5%.

1990 **

SELF-RELIANCE **

The past decade has seen an explosion of mineral, oil and natural-gas exploration and extraction but roost of the profits are taken abroad by transnational corporations. Peru is still dependent on foreign aid and loans.

1990 **

POSITION OF WOMEN ***

Legislation protecting women's rights is good but enforcement is weak. Politically many women are doing well, holding important positions in government ministries and Congress.

1990 ***

LITERACY ****

90%, though rural literacy is lower at 70%. Primary-school attendance stands at 87%.

1990 ***

FREEDOM ****

The fall of Fujimori's draconian government means freedom of expression and other personal freedoms have greatly improved but public access to government information is still hindered.

1990 **

LIFE EXPECTANCY ****

69 years (Bolivia 62, US 77).

1990 **

POLITICS

NI ASSESSMENT ***

New President Alejandro Toledo faces the arduous task of reforming the country's tattered democratic institutions and stamping out corruption in the wake of Fujimori's 10-year virtual dictatorship. with his Andean features and humble origins, Toledo won over the country's majority poor population by promising lobs, respect for indigenous peoples and a better future for all, The honeymoon was short-lived: Toledo has already proved that his real loyalty is to world Bank and IMF policies.

NI STAR RATING

EXCELLENT *****

GOOD ****

FAIR ***

POOR **

APPALLING *