What USAID cuts mean for Peru as it battles cartels on coca, gold trade
In Peru’s Amazon region, drug gangs running the coca trade in cooperation with Mexican cartels have over recent years expanded into illegal mining, especially for gold.
In response, the U.S. Agency for International Development shifted some counternarcotics and development resources in Peru to buttress nongovernmental organizations combating illegal mining through environmental and sustainable-development initiatives.
But now, with the Trump administration eliminating USAID and folding reduced humanitarian and development assistance budgets into the State Department, some Peruvians worry that progress against illegal mining will be reversed.
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Peru received $135 million in USAID funding in 2024. Much was for projects combating narcotics and gold trafficking, which are now linked. But substantial contributions were also made in areas ranging from democratic governance to minority rights.
Moreover, the intertwined nature of the illegal trades that Peru confronts – from coca and gold to wildlife and even people – means that less attention to illegal mining is likely to mean smoother sailing for other trafficking operations as well.
“The new menace we face in Peru is the cocaine-gold connection, but the exit of USAID funding is going to set back the initial strides we have made to counter this threat,” says Ricardo Soberón, a former executive director of Devida, Peru’s National Commission for Development and Life Without Drugs.
“Overall for Peru, it’s a bad thing to lose USAID funding, for a variety of reasons,” he says. “But specifically for this new mining menace, it’s terrible timing.”
The elimination of USAID is part of a significant overhaul and downsizing of the State Department and its diplomatic functions that Secretary of State Marco Rubio is engineering.
On Tuesday Mr. Rubio unveiled elements of a sweeping State Department reorganization that eliminates more than a dozen agencies and absorbs formerly separate functions into others.
He says the “long overdue” reorganization will deliver a more efficient and focused diplomacy for the “great power competition” of the 21st century. Critics, including Democratic members of Congress, counter that the Trump administration’s plans target longtime U.S. interests in democratization, human rights, and international justice, and will damage America’s standing on the world stage.
Mr. Soberón highlights the cocaine-gold nexus because he says the U.S. response was emblematic of how USAID often operated in Peru. U.S. funding was akin to seed money to get an initiative off the ground, he says.
In this case, USAID money underwrote creation of an environmental crimes pilot project that supported a separate environmental justice system – with police, prosecutors, and judges – as well as environmental NGOs working on sustainable development and mining substitution.
The idea was that the Peruvian government would eventually take over the project, says Mr. Soberón, a counternarcotics analyst and alternative development expert.
“But there was a need for a second stage to that U.S. support,” he adds, noting that illegal mining has expanded to 20 of Peru’s 24 regions. “Now it’s unclear what will happen to the whole effort.”
Last year alone Peru received $135 million in USAID funding. And while the broad array of projects under the counternarcotics umbrella received much of that money, substantial contributions were also made in areas ranging from democratic governance and minority rights to independent press development.
The elimination of most of the U.S. humanitarian and development funding can’t help but set back those efforts, many here say. But some experts and former officials insist that in the long run the United States will also come out the loser by exiting what some here refer to as the people-to-people side of diplomacy.
“The current [U.S.] administration talks about all of these programs in terms of cost and burden,” says Cynthia Sanborn, a professor of political science at Universidad del Pacifico in Lima. “There seems to be no recognition that the goodwill and favorability these efforts built up over the long haul benefited [the U.S.] tremendously.”
Last month the State Department notified Congress it was dissolving USAID and absorbing some functions. Secretary Rubio had already announced that about 80% of USAID’s programs had been eliminated.
Last week speculation grew that a significant State Department downsizing was imminent. A reorganization chart leaked this week suggests a nearly 20% reduction in agencies and staffing. According to Secretary Rubio, new streamlined humanitarian and development efforts will reflect “America’s values” and will cut waste.
Some experts in Peru acknowledge that decades of USAID funding have not always yielded positive results.
“After 30 years of U.S. [counternarcotics] efforts through USAID and other agencies, we still have the same amount of coca production,” says Mr. Soberón, noting that Peru is the second-largest supplier of cocaine to the U.S. after Colombia.
“Yes, we have had some successes in alternative development, replacing coca in some areas with cacao and coffee,” he says. “But … something isn’t working.”
Matthew Clark/The Christian Science Monitor/File
Mr. Soberón says he has often encountered what he considered to be inefficient and overly bureaucratic operations at USAID. Neighboring Bolivia achieved better results in coca substitution with the holistic community development model it instituted after ordering USAID out of the country in 2013, he says.
But he says Peru has benefited from years of U.S. partnership in areas like institution-building and grassroots organization support.
Others say that from what they observed, USAID recently was actually becoming more effective in Peru – both in terms of the kinds of programs and initiatives it was encouraging and as an effective promoter of values traditionally associated with the U.S., such as democracy, transparency, and human rights.
“My impression was that [USAID] was an agency that was improving, working better, and making strides into the soft diplomacy that if done right can accomplish a lot,” says Gustavo Gorriti, founder of the IDL-Reporteros investigative journalism site.
“Experience demonstrates that this kind of soft diplomacy is effective over the long term in the countries where it’s applied, but also for the United States and its projection of power,” he says. “However, from what we are seeing,” he adds, “these are things that are of no importance whatsoever to the current administration.”
