When Air Force One skims over the Pacific Ocean and sets down on the runway at Lima's Jorge Chavez International Airport on March 23 it will deliver the first American president to visit Peru.

After starting his presidency with a strong interest in developing relations with America's neighbors to the south, notably Mexico, President George W. Bush had his priorities changed by the September 11 terror attack last year, which forced him to focus his international efforts on the war on terror, elsewhere in the world.

His visit to Peru marks a return to developing north-south ties in the Western Hemisphere.

Peru was a good choice. After the country went through several years of instability as a corrupt and power-hungry Alberto Fujimori tried desperately to secure a third term as president, on June 3 last year the people chose Alejandro Toledo as president for a five-year term, ushering in a new era of credible government with good prospects to expand bilateral relations with Washington and act as a reliable American partner for the wider development of Latin America.

Most countries of the region are currently passing through economic difficulties or face national elections in the near future, making Peru's fresh start a good opportunity for Washington's efforts to expand hemispheric development.

Bush's decision to visit Peru was also encouraged by his good personal relations with Toledo, who was one of the first world leaders to express strong support for America after September 11 and has adopted pro-democracy and pro-market policies very much in line with those of the United States.

Toledo has been so intent on reforming government and appointing ministers who are competent rather than partisan loyalists that only one is a member of his ruling Perœ Posible party.

Prime Minister Dañino

To head his government he chose Roberto Dañino, an able lawyer with many years experience in Washington.

Dañino, whose watchword is "stability," says Peru hopes the Bush visit will usher in a new era of strong bilateral ties, in particular increased Peruvian trade with America and investment from U.S. companies.

"This trip should be the starting point of a new bilateral agenda between Peru and the U.S. I believe that it should start a process for an enhanced commercial relationship... that should lead us eventually to the FTAA" (Free Trade Agreement for the Americas), he told The Washington Post in a February 28 interview.

He noted that while Peru annually exports $215 per capita, neighbor Colombia exports about $380, Ecuador $450 and Chile $1,400 per capita.

Dañino sees the expansion of the Andean Trade Preferences Act (ATPA) to include apparel as only the first step in what is needed to boost exports. Chile's efforts to secure a bilateral free trade agreement with the United States is viewed by Peru as an example to follow, and Dañino said Lima does not want to wait for other members of the Andean Community before pushing ahead with a bilateral free trade pact with Washington.

"I think the immediate step we should be working on is a bilateral trade agreement with the U.S.," he said.

"This should be done through the Andean pact," however, three of the other Andean nations "are going through electoral processes that will prevent prompt progress."

The prime minister said he thought Lima could lead the way for other Andean countries to enter trade agreements with Washington, but that Peru could not wait for all the members to line up behind a common approach, although they have joined forces to promote the ATPA.

"In the case of Peru this (bilateral pact) is crucial, because our per capita exports are extremely low... Peru is really in urgent need, especially because we are in the process of democratic consolidation."

Part of that consolidation has to do with making Peru a more free and open country, and part with investing in social as well as economic development. "We are providing... a democratic system where you have full freedom of speech, full respect for human rights," Dañino said.

"The novel thing about the government program is that it really focuses equally on the economic policies and the social policies," he added.

To put words into action without inflating the budget, this year 16 percent was cut from defense spending, reducing it to 1.8 percent of GDP, which is low by world standards.

The money saved was put towards much-needed social programs, especially in health and education.

But Peru has also campaigned for a reduction in the acquisition of offensive weapons in the region, and it worries that part of Chile's growing wealth has been invested in U.S.-made weapons, increasing a military imbalance between the two neighbors.

American companies in Peru welcome the pro-business approach of the Toledo administration, and several have joined a local organization of major corporations, Adepsep, set up to explain to the general population that jobs are created from private investment and not government spending.

The American Chamber of Commerce (Amcham) in Peru is also active in this field and in lobbying for improvements in laws and their implementation to protect investors, even though U.S. companies have few serious complaints about transparency, regulation and the rule of law.

Dañino sees only one way ahead for Peru's economy, and that is improving the business environment so that private investment, domestic and international, will increase, creating jobs and boosting exports.

Thus, while pushing for expanded trade relations with America, APEC and the European Union, as well as other Latin American countries, Peru is also actively trying to improve its competitiveness.

The government's policies are already showing results. In late February a report by the Inter-American Development Bank predicted that Peru would achieve GDP growth of 4 percent this year, compared to zero growth for the rest of Latin America.