Peru. Country Report. Date Printed Last Updated: April 2017

Peru Country Report Date Printed 08-18-2018 Last Updated: April 2017 Worldwide Naval Projections Report, Naval Systems Projection Database, Missile Systems of the World, World Missiles On-Line, Existing Ships Database, AMIInternational HOT NEWS, and Naval Ships Transfer Assessment A Ten Year Perspective are all copyrighted works prepared by AMI International. AMI International copyright data, be it in book or electronic form, or as attachments in email or used in part in any report, briefing or table are restricted specifically to your company s authorized employees that are party to the subscription agreement with AMI International. http://www.amiinter.com page 1/17 2018 AMI International

Table of Contents Front Page... p. 1 Index... p. 2 Highlights, General Data & Political Data... p. 3 Economy... p. 5 Defense & Naval Budget... p. 6 Defense Acquisition, Supplier Trends & Alliances International... p. 7 Defense Policy, Organization & Forces... p. 9 Naval & Coast Guard Organization & Maritime Threat/Mission... p. 10 Shipbuilding Infrastructure & Shipyards... p. 12 Modernization... p. 13 Decommissionings, Transfers, & Receipts... p. 15 Key Defense Organization Personalities... p. 16 Projects... p. 17 http://www.amiinter.com page 2/17 2018 AMI International

Highlights: Peru's has enjoyed one of the most robust and stable economies in South America. Based on information from the International Monetary Fund (IMF), the Peruvian economy will see steady growth for the foreseeable future. GDP growth for Peru should reach 4.1% for 2017. Inflation will remain steady around 2.5%. For the near term Peru s economy will remain relatively stable with GDP growth averaging around 3.6% with inflation holding steady at 2.5% for the remainder of the decade. Similar to its South American neighbors, Peru is increasing its defense spending although GDP growth has slowed somewhat. Peru is trying to catch up after years of low defense spending, especially as drug trafficking and other illicit threats in the nation are on the increase and the military is in need of modernization. In 2017, the Peruvian Armed Forces likely received US$2.9B as its defense expenditure percent of GDP increased to 1.5%. The United States continues to provide funding to Peru to help in its counter-drug programs. AMI estimates the Peruvian Navy (Marina de Guerra del Perú - MGP) receives approximately 25% of the total armed forces defense budget and must then divide these funds with the Peruvian Coast Guard (Guardacostas del Perú - GP), which is a subordinate organization receiving approximately 37% of the navy's allocation for annual funding. At this level, the navy received approximately US$722M in 2017. AMI further estimates that approximately 40% of available funds (US$289M) are designated for procurement of new platforms. For 2017, AMI estimates the coast guard budget is approximately US$224M, with about US$107M (about 40%) designated for procurement.? National Defense White Paper (Libro Blanco de la Defensa Nacional) 2005 is the most recent defense policy white paper available for Peru. Peru s international position and foreign policy are determined by its geographic location and its democratic ideals. In recent years, Peru has resolved its territorial disputes with Chile and Ecuador, and South America is considered one of the most stable regions in the world. The Peruvian Navy is a capable and professional maritime force, but its fleet is aging. Due to a lack of an external threat, the sea service is being pressured to reduce this fleet size and reassess its capabilities to focus on more pressing threats. Peru, while promising more funding for its overall defense budget, will have to focus on recapitalization efforts during the next 10 years to maintain a modern fleet. As part of these recapitalization efforts the sea service is acquiring to Makassar class landing platform-dock (LPD) vessels which are to be commissioned into service in 2017 and 2019. The navy taken delivery of the Polar Research Ship, BAP Carrasco on 22 March 2017. Two 55-meter Pativilca (STX 500) class patrol craft were delivered in 2016. Two more patrol boats will be delivered in 2017 and two additional patrol craft are to be procured in the 2022 timeframe. It remains to be seen whether the Peruvian Navy will acquire new frigates to replace its Lupo class and new submarines to replace its Type 209/1200s during the next decade. The MGP is a capable and professional maritime force, but its fleet is aging. Peru, while promising more funding for its overall defense budget, will have to focus on recapitalization efforts during the next 10 years to maintain a modern flee General Data Coastline: 2,414 km (1,500 miles) Maritime Claims: Territorial Sea: 200nmContinental Shelf: 200nm National Capital & Defense Headquarters: Lima Language: Spanish (official), Quechua (official), Aymara Population: 30,741,062 (July 2016, est.) ISO Alpha-2 Code: PE ISO Alpha-3 Code: PER ISO Numeric Code: 604 Political Country's Legal Name: Republic of Peru Type of Government: Constitutional Republic Executive Branch: Chief of State: President Pedro Pablo Kuczynski Godard (since 28 July 2016); First Vice President Martin Alberto Vizcarra Cornejo (since 28 July 2016); Second Vice President Mercedes Rosalba Araoz Fernandez (since 28 July 2016). Note: The president is both chief of state and head of government. Cabinet: Council of Ministers appointed by the president. Elections/Appointments: The president directly elected by absolute majority popular vote in 2 rounds if needed for a 5-year term (eligible for nonconsecutive terms). Election last held on 10 April 2016 with runoff on 5 June 2016. Next election to be held in April 2021. Legislative Branch: Unicameral Democratic Constituent Congress (Congresso Constituyente Democratico) (130 seats; members are elected by popular vote to serve five-year terms). Elections: Last held on 10 April 2016 with run-off election on 6 June 2016 (next to be held in April 2021). Judicial Branch: Highest Court(s): Supreme Court (consists of 16 judges and divided into civil, criminal, and http://www.amiinter.com page 3/17 2018 AMI International

constitutional-social sectors). Judge selection and term of office: Justices are proposed by the National Council of the Judiciary or National Judicial Council (a 7-member independent body), nominated by the president, and confirmed by the Congress (all appointments reviewed by the Council every 7 years). Justices appointed for life or until age 70. Subordinate Courts: Court of Constitutional Guarantees; Superior Courts (or Cortes Superiores); specialized civil, criminal, and mixed courts; 2 types of peace courts in which professional judges and selected members of the local communities preside. http://www.amiinter.com page 4/17 2018 AMI International

Economic Key Economic Indicators: Year Nominal GDP Current Acct PEN /US$ Real GDP Growth Rate % Inflation % Balance Exch Rate US$ B PEN B (% of GDP) (Year Avg) 2010 148.562 419.694 8.45 % 1.53 % -2.38 % 2.830 2011 170.605 469.883 6.45 % 3.37 % -1.86 % 2.750 2012 192.495 507.697 5.95 % 3.65 % -2.65 % 2.640 2013 201.929 545.822 5.81 % 2.80 % -4.24 % 2.700 2014 202.841 575.814 2.39 % 3.24 % -4.04 % 2.840 2015 192.113 611.903 3.28 % 3.54 % -4.35 % 3.190 2016 180.291 649.048 3.74 % 3.55 % -3.77 % 3.600 2017 192.619 693.427 4.11 % 2.50 % -3.14 % 3.600 2018 204.857 737.485 3.57 % 2.51 % -2.69 % 3.600 2019 217.226 782.012 3.52 % 2.47 % -2.64 % 3.600 2020 230.374 829.346 3.50 % 2.50 % -2.50 % 3.600 Estimated Data * U.S. Foreign Military Assistance Currency: Peruvian Neuvo Sol GDP per capita: US$5934.54 (2015 Est.) Economic Overview: The Peruvian economy grew by an average of 6.6% from 2010-13 with a stable exchange rate and low inflation. This growth was due partly to high international prices for Peru's metals and minerals exports, which account for almost 60% of the country's total exports. Growth slipped in 2014 and 2015, due to weaker world prices for these resources. Despite Peru's strong macroeconomic performance, dependence on minerals and metals exports and imported foodstuffs makes the economy vulnerable to fluctuations in world prices. During the Humala administration, the government championed a policy of social inclusion and a more equitable distribution of income. The Humala administration passed several economic stimulus packages in 2014 to bolster growth, including reforms to environmental regulations in order to spur investment in Peru s lucrative mining sector, a move that was opposed by some environmental groups. However, in 2015, mining investment fell as global commodity prices remained low and social conflicts plagued the sector. Poor infrastructure hinders the spread of growth to Peru's non-coastal areas. Peru's free trade policy has continued under the Humala administration; since 2006, Peru has signed trade deals with the US, Canada, Singapore, China, Korea, Mexico, Japan, the EU, the European Free Trade Association, Chile, Thailand, Costa Rica, Panama, Venezuela, concluded negotiations with Guatemala and the Trans-Pacific Partnership, and begun trade talks with Honduras, El Salvador, India, Indonesia, and Turkey. Peru also has signed a trade pact with Chile, Colombia, and Mexico, called the Pacific Alliance, that seeks integration of services, capital, investment and movement of people. Since the US-Peru Trade Promotion Agreement entered into force in February 2009, total trade between Peru and the US has doubled. According to the IMF, GDP growth for Peru should reach 4.1% or US$192.6B. Inflation will remain steady around 2.5%. For the near term Peru s economy will remain relatively stable with GDP growth averaging around 3.6% with inflation holding steady at 2.5% for the remainder of the decade. http://www.amiinter.com page 5/17 2018 AMI International

Defense Budget Year Total National Add'l Defense Total Defense Defense Budget Related Funding Expend. Defense Budget Growth Defense Expend. (% net inflation) (% of GDP) US$ B PEN B US$ B * PEN B * US$ B PEN B 2010 1.93100 5.45600 0.002 0.006 1.933 5.471 1.00 % 1.30 % 2011 2.21800 6.10800 0.003 0.008 2.221 6.107 1.00 % 1.30 % 2012 2.50200 6.60000 0.002 0.005 2.504 6.612 1.00 % 1.30 % 2013 2.82700 7.64200 0.002 0.005 2.829 7.638 1.00 % 1.40 % 2014 2.84000 8.06100 0.002 0.006 2.842 8.071 1.00 % 1.40 % 2015 2.69000 8.56700 0.002 0.006 2.692 8.586 1.00 % 1.40 % 2016 2.52400 9.08700 0.002 0.006 2.526 9.093 1.00 % 1.40 % 2017 2.88900 10.40100 0.002 0.006 2.891 10.408 1.00 % 1.50 % 2018 3.07300 11.06200 0.002 0.006 3.075 11.069 1.00 % 1.50 % 2019 3.25800 11.73000 0.002 0.007 3.260 11.737 1.00 % 1.50 % 2020 3.45600 12.44000 0.002 0.007 3.458 12.447 1.00 % 1.50 % Estimated Data * U.S. Foreign Military Assistance Similar to its South American neighbors, Peru is increasing its defense spending, focusing on maritime security and law enforcement activities, such as counter-drug and human trafficking. Peru is trying to catch up after years of low defense spending, especially as drug trafficking in the nation is on the increase and the military is in need of modernization. In 2017, Peru s defense budget will receive approximately US$2.9B as its defense expenditure percent of GDP increased to 1.5%, still relatively low compared to world defense spending. The U.S. will continue to provide funding to Peru to help in its anti-drug trafficking battle. Naval Budget Year Naval Budget Naval Procurement Coast Guard Budget Coast Guard Procurement Total Procurement US$ B PENB US$ B PENB US$ B PENB US$ B PENB US$ B PENB 2010 0.48300 1.36600 0.193 0.547 0.150 0.424 0.060 0.169 0.253 0.716 2011 0.55400 1.52500 0.222 0.610 0.172 0.473 0.069 0.189 0.291 0.799 2012 0.62600 1.65200 0.250 0.661 0.194 0.512 0.078 0.205 0.328 0.865 2013 0.70700 1.90800 0.283 0.763 0.219 0.592 0.088 0.237 0.370 1.000 2014 0.71000 2.01600 0.284 0.806 0.220 0.625 0.088 0.250 0.372 1.057 2015 0.67200 2.14500 0.269 0.858 0.208 0.665 0.083 0.266 0.620 1.124 2016 0.63100 2.27200 0.252 0.909 0.196 0.704 0.078 0.282 0.331 1.190 2017 0.72200 2.60000 0.289 1.040 0.224 0.806 0.090 0.322 0.378 1.363 2018 0.76800 2.76600 0.307 1.106 0.238 0.857 0.095 0.343 0.403 1.449 2019 0.81500 2.93300 0.326 1.173 0.253 0.909 0.101 0.364 0.427 1.537 2020 1.07100 3.85600 0.428 1.543 0.332 1.196 0.133 0.478 0.561 2.021 AMI estimates the MGP receives approximately 25% of the total armed forces defense budget and must then divide these funds with the GP, which is a subordinate organization receiving approximately 37% of the MGP s allocation for annual funding. At this level, the MGP received approximately US$722M in 2017. AMI further estimates that approximately 40% of available funds are designated for procurement of new platforms. In 2017, this amounted to about US$289M. For 2017, AMI estimates the GP budget is approximately US$224M, with about US$90M (about 40%) designated for procurement. http://www.amiinter.com page 6/17 2018 AMI International

Defense Acquisition Peru's procurement law is dictated by Legislative Decree No. 1017. The Peruvian government seeks to foreign and domestic investment in nearly all sectors of the economy. The 1993 Constitution guarantees national treatment for foreign investors and permits foreign investment in almost all economic sectors. Under the Constitution, foreign investors have the same rights as national investors to benefit from any investment incentives, such as tax exemptions. Article 6 of Supreme Decree No. 162-92-EF authorizes private investors to carry out any economic activity, provided investors comply with all constitutional precepts, laws and treaties. However considering defense related manufacture and procurement of military weapons, Article 6 of Legislative Decree No. 757 stipulates governmental approval is required for foreign investment. The Fuerzas Armadas del Perú ((FAP) Peru s Armed Forces) (and National Police) continue to prefer to execute government-to-government procurements (i.e., purchases by a GOP agency from a foreign government agency or government-owned company). In July 2012, the Government Procurement Supervisory Agency ruled that government-to-government procurements do not fall under the government procurement law (DL 1017). An article in the 2013 Budget Law also specified that procurements by the Peruvian government from another state are not under the scope of DL 1017. Since then, there have been several local media reports of overvalued prices in several government-to-government purchases of goods or services for the police or the armed forces. The acquisition of weapon systems is dictated by the FAP requirements. Specific proposals are generated by the services and forwarded to the Chairman of the Armed Forces Joint Command. Proposals are then forwarded to the Minister of Defense and the National Defense Council (headed by the President) for approval. It is not known how much influence is needed in the procurement process in Peru. However, under the guise of military secrecy, the lack of transparency would suggest having a partner that is related or close to the senior military leadership would be helpful in winning major contracts. To sell to the Government of Peru, a foreign company or its agent/peruvian partner must register as a supplier with the appropriate ministry and provide credentials indicating that the Peruvian firm is a legitimate representative of the foreign company. If using an agent, it need not be a Peruvian national, but must be a resident of Peru. Peruvian law excludes all government officials on active duty from negotiating contracts with the government. Former government officials, who still probably have considerable influence in the government, are not covered by this law. Another factor is that off budget items are not known publicly. This secrecy increases the likelihood that senior military officials and civilian government officials may be involved in negotiations "off the record". Peruvian Law also permits independent distributors to pay commissions or fees to third parties in connection with sales to the government. There are no Peruvian restrictions on commissions or mark-ups on sales to the government by either agents or distributors. Neither are there common nor customary rates in regard to this matter. In an attempt to promote transparency, government agencies usually publish tender notices in the main newspapers. Procurement of certain types of military equipment, under the guise of secrecy are probably exempt from public advertisement, especially the off budget items. Any foreign supplier can also expect that some type of offset arrangement may be required when supplying government agencies in Peru. Foreign competitors should expect offset agreements for contracts over US$10M. Offset ratios set by the Peruvian government are approximately 100% of the main contract amount, with 30% that must be submitted within six months of the agreement. The remaining 70% must be submitted with two years of the agreement. The Directorate of Research and Development coordinate the Framework Agreement with the winning supplier/bidder. The DRD submits a draft Framework Agreement to the Directorate General of Material Resources for Defense for approval. The Vice Minister of Resources for Defense submits the draft agreement to the Minister of Defense for signature. For additional information, please visit the Ministry of Defense at: http://www.mindef.gob.pe or the Supervising Body of State Contracting: http://portal.osce.gob.pe/osce/node/386. Supplier Trends From 2010-2016, Peru received US$705M in miltary imports. The following are primary foreign suppliers of the FAP: Russia (US$221M) South Korea (US$145M) Netherlands (US$94M) Canada (US$51M) Italy (US$68M) The MGP and GP are primarily composed of German, Italian, Dutch, French, US and indigenously built vessels, procured from the 1950s through the 1980s. Two Carvajal (Lupo) class frigates, and several classes of Coast Guard patrol boats vessels were built locally, at the Servicios de la Marina (SIMA) Peru Shipyard. South Korea has become an important supplier for the MGP. Sima Callao is currently building two Makassar class amphibious transport dock (LPD) vessels for the MGP. This effort is part of an April 2012 agreement when the Peruvian Government signed a Memorandum of Understanding (MoU) with South Korea's Daewoo Shipbuilding and Marine Engineering (DSME) for submarines and amphibious ships. This was followed in November 2012 by the signing of a US$300M contract with SIMA for the construction of 13 naval vessels; two of which are 7,300-ton logistic support ships. It is also noteworthy to mention, in 2015 the South Koreans donated a Pohang class corvette ROKS Gyeong Yu (758) delivered in early 2016. A second Pohang class corvette will be transferred to Peru, probably in 2017. Alliances & International Organization Participation Peru maintains diplomatic relations with more than 170 countries and these relations are maintained through a variety of international organizations. The most significant diplomatic relationships are as follows: International Organization http://www.amiinter.com page 7/17 2018 AMI International

Participation G20 1999 Asia-Pacific Economic Cooperative (APEC) 1998 Latin American and Caribbean Economic System (LACES) 1975 International Maritime Organization (IMO) 1968 United Nations 1949 Organization of American States (OAS) 1948 The international relations maintained by the MGP are predominantly regional in nature. However, Peru and the US have maintained close ties based on mutual interests in maintaining democratic institutions, combating insurgency groups, narco-trafficking, building trade, investments and financial ties, cooperating in fostering Peru s economic development and participating in inter-american organizations and exercises, such as the major multi-national, joint naval exercise, UNITAS. In March 2012, the US and Peru signed a Memorandum of Understanding on Strengthening Military-Political Dialogue. http://www.amiinter.com page 8/17 2018 AMI International

Defense Policy Government Crest National Defense White Paper 2005 (A contribution to confidence and security-building measures, democracy and peace in the Hemisphere) is the most recent defense policy white paper available for Peru. Peru s international position and foreign policy are determined by its geographic location and its democratic ideals. Peru has recently resolved its territorial disputes with Chile and Ecuador, and South America is considered one of the most stable regions in the world. Peru does not face any external security threats, however, as a result of Chile s purchase of four frigates from the Netherlands in 2004, three British destroyers in 2006 and the subsequent acquisition of two Scorpene diesel submarines from France; Peru perceives a technological and military imbalance in the region. Peru s primary security threats are internal. The FAP and PNP are faced with two major insurgency groups narcotics operations within its borders and occasional rogue elements within the military itself. Additionally, government forces have been engaged in counterinsurgency (COIN) operations against the pro-communist Sendero Luminoso (SL) and the Tupac Amaru Revolutionary Movement (MRTA). Under the Fujimori administration, the military made great strides against the insurgencies. However, the FAP has been unable to achieve total victory and after several years of almost no activity, the SL seems to have reemerged despite the government s efforts in maintaining democratic institutions to lessen public support for the SL. Peru is also a major producer of cocoa, the key ingredient in the production of cocaine. Until recently the world s largest cocoa leaf producer, Peru has made major strides in eradicating cocoa production. Most of the cocaine base is shipped to neighboring Colombia, Bolivia and Brazil for processing into cocaine for the international drug market. Cocoa production is also a major financing mechanism for the insurgency groups. The biggest problem for the PAF and the PNP are its own loyalties and political ambitions. Peru has traditionally been mired in coups and coup attempts throughout its history, usually led by an element (or elements) of the armed forces. Power-grabbing by the FAP and PNP, as well as the freely elected government officials, still persist within Peru. To download the National Defense White Paper, please visit: http://www.mindef.gob.pe/vercontenido.php?archivo=menu/libroblanco/index.htm (Spanish only). Peru is also a major producer of coca, the key ingredient in the production of cocaine. Until recently the world s largest coca leaf producer, Peru has made major strides in eradicating coca production. Most of the cocaine base is shipped to neighboring Colombia, Bolivia and Brazil for processing into cocaine for the international drug market. Coca production is also a major financing mechanism for the insurgency groups. The biggest problem for the PAF and the PNP are its own loyalties and political ambitions. Peru has traditionally been mired in coups and coup attempts throughout its history, usually led by an element (or elements) of the armed forces. Power-grabbing by the FAP and PNP, as well as the freely elected government officials, still persist within Peru. To download the National Defense White Paper, click here. Defense Organization Defense Organization of the Peru Position Responsibility President Commander-in-Chief of the PAF. Chief of State and Head of Government. Minister of Defense Usually a civilian appointed by the President. MD is responsible for all matters regarding military policy, order and other miscellaneous affairs dealing with the armed forces and related to national defense. Joint Commander of Armed Forces A four-star General or Admiral, is the senior most military officer of the PAF and has operational authority over all branches of the armed forces, with directions from the President through the MND. Service Chiefs The senior-most officer of that service. Operational Commanders There are five operational commands in the Army, three in the Navy (including the Coast Guard and Marines) and one in the Air Force. A Spanish-only defense organization diagram is available at: http://www.mindef.gob.pe/informacion/documentos/organigrama_2011.pdf. Additional information concerning the Ministry of Defense is available at:https://www.mindef.gob.pe/principal.php Defense Forces Crest The FAP consists of approximately 81,000 active duty personnel, including: 47,500 in the Army (Ejército del Perú (EP)). 24,000 in the MGP, including 1,000 in the GP. 9,500 in the Air Force (Fuerza Aérea del Perú). 77,000 in the National Police (Policía Nacional del Perú (PNP)). Approximately 188,000 EP reserve personnel support the active duty force. http://www.amiinter.com page 9/17 2018 AMI International

Naval & Coast Guard Organization Naval Crest The MGP is organized into four command authorities: Chief of the Naval Staff Chief of Naval Operations Flag Officer Commanding Marines Director General of the Coast Guard The operational forces are divided into two commands: Amazon River Force: Headquartered at Iquitos. Pacific Naval Force: Headquartered at Callo and is divided into two Flotillas and a submarine command, as well as five Naval Zones:1st Flotilla: Maintains all vessels for bluewater operation, including oilers.2nd Flotilla: Maintains all coastal combat vessels, amphibious ships and transport vessels.submarine Command: Maintains Peru s submarine force plus a torpedo recovery vessel. The five Naval Zones are divided as follows: 1st Naval Zone: Headquartered in Piura. 2nd Naval Zone: Headquartered in Callao. 3rd Naval Zone: Headquartered in Arequipa. 4th Naval Zone: Headquartered in Puerto Maldonado. 5th Naval Zone: Headquartered in Iquitos. The MGP fleet consists of around 49 ships and craft, and 47 naval aircraft. The fleet is home ported at Callo, San Lorenzo, Chimbote, Paita and San Juan, with river bases located at Iquitos and Puno. Other small operational bases are located in El Salto, Bayovar, Pimental, Pacasmayo, Salaverry, Mollendo, Matarani, Ilo, Inambari, Pucallpa and El Estrecho. The GP is headquartered at Callao and consists of 24 surface craft and three aircraft. The Coast Guard is part of the MGP and shares the same basing facilities and repair yards with the sea service. Additional information on the MGP is available on the internet at: http://www.marina.mil.pe/page/organigrama. (Spanish only). Information on the GP is available online at: https://www.dicapi.mil.pe/organigrama.htm (Spanish only). The MGP fleet consists of around 73 ships and craft, and 32 naval aircraft. The fleet is home ported at Callo, San Lorenzo, Chimbote, Paita and San Juan, with river bases located at Iquitos and Puno. Other small operational bases are located in El Salto, Bayovar, Pimental, Pacasmayo, Salaverry, Mollendo, Matarani, Ilo, Inambari, Pucallpa and El Estrecho. The GP is headquartered at Callao and consists of 53 surface craft and three aircraft. The Coast Guard is part of the MGP and shares the same basing facilities and repair yards with the sea service. Additional information on the MGP is available at: https://www.marina.mil.pe/page/organigrama (Spanish only), and the GP at: http://www.dicapi.mil.pe (Spanish only). Active Naval & Coast Guard Vessels Jack Naval Forces The ships of the MGP are identified by the prefix BAP (Spanish: Buque Armada Perú; Translation: Ship of the Armada of Peru). MGP surface ships are painted with haze gray hulls and superstructures and dark gray decking with a black stripe at the waterline. Surface ships have large white block-numbered hull numbers on the bow. Peruvian submarines are painted black and have white block-numbered hull numbers painted on the left and right sides of the sail. The sea service currently consists of 73 ships and craft, including: Six Angamos/Islay (Type 209/1200) class submarines. One Almirante Grau class cruiser. Nine frigates, including:four Carvajal (Lupo) class.four Aguirre class.one Pohang class. Six Velarde (PR-72P) class fast attack craft (FAC) Twelve patrol boats:two Pativilca (STX 500) class.two Maranon classtwo Amazonas classtwo Clavero classfour Punta Malpelo class Two Paita (Terrebonne Parish) class landing ships, tank (LSTs) Two Griffon 2000TD class (LCAC) Thirty-five auxiliary ships and craft. The MGP is to receive its first of two Makassar class LPDs in 2017. The second and final vessel of the class is expected to be delivered in 2019. Coast Guard Forces The ships of the GP are also identified by the prefix BAP. Coast guard crft are painted with haze gray hulls and white superstructures and dark gray decking. They have a diagonal 1/4 red - 1/2 white - 1/4 red stripe on the bow, with the GP fouled anchor emblem at the cent of the white portion and the word, "GUARDACOSTAS" painted on the hull amidships or the bow (depending on the size of the vessel). Large whilt block-numbered hull numbers are on the bow, forward of the diagonal stripe. The Coast Guard currently has 53 ships and craft, including: Peru Coast Guard One Carvajal (Modified Lupo) class offshore patrol vessel. One PGM 71 class patrol boat. 51 patrol craft (various sizes of which most are for riverine, harbor or lake patrol duties). http://www.amiinter.com page 10/17 2018 AMI International

Active Naval & Coast Guard Vessels Jack Naval Forces The ships of the MGP are identified by the prefix BAP (Spanish: Buque Armada Perú; Translation: Ship of the Armada of Peru). MGP surface ships are painted with haze gray hulls and superstructures and dark gray decking with a black stripe at the waterline. Surface ships have large white block-numbered hull numbers on the bow. Peruvian submarines are painted black and have white block-numbered hull numbers painted on the left and right sides of the sail. The sea service currently consists of 73 ships and craft, including: Six Angamos/Islay (Type 209/1200) class submarines. One Almirante Grau class cruiser. Nine frigates, including:four Carvajal (Lupo) class.four Aguirre class.one Pohang class. Six Velarde (PR-72P) class fast attack craft (FAC) Twelve patrol boats:two Pativilca (STX 500) class.two Maranon classtwo Amazonas classtwo Clavero classfour Punta Malpelo class Two Paita (Terrebonne Parish) class landing ships, tank (LSTs) Two Griffon 2000TD class (LCAC) Thirty-five auxiliary ships and craft. The MGP is to receive its first of two Makassar class LPDs in 2017. The second and final vessel of the class is expected to be delivered in 2019. Coast Guard Forces The ships of the GP are also identified by the prefix BAP. Coast guard crft are painted with haze gray hulls and white superstructures and dark gray decking. They have a diagonal 1/4 red - 1/2 white - 1/4 red stripe on the bow, with the GP fouled anchor emblem at the cent of the white portion and the word, "GUARDACOSTAS" painted on the hull amidships or the bow (depending on the size of the vessel). Large whilt block-numbered hull numbers are on the bow, forward of the diagonal stripe. The Coast Guard currently has 53 ships and craft, including: Peru Coast Guard One Carvajal (Modified Lupo) class offshore patrol vessel. One PGM 71 class patrol boat. 51 patrol craft (various sizes of which most are for riverine, harbor or lake patrol duties). http://www.amiinter.com page 11/17 2018 AMI International

Shipbuilding Infrastructure Peru is dependent on foreign procurement for its submarine force. However is capable of building up to frigate-sized vessels and large auxiliaries in its own shipyards. It can be expected that Peru will become more self-sufficient in fulfilling its shipbuilding requirements due to cheaper labor costs in-country. Peru will however, require foreign assistance for complex weapons and integration for its future naval requirements. Shipyards Servicios Industriales del la Marina SA. (Corporate Headquarters) Av Contralmirante Mora 1120, Callao, Peru Fax: +511 413-1130 http://www.sima.com.pe/default_eng.asp Contact:Executive Director: Herbert Del Alamo CarrilloEmail: herbertdelalamo@sima.com.pe Head of Sima Callao: Jorge Moises Padilla RamonEmail: jpadilla@sima.com.pecommercial Manager: Carlos De Izcue ArnillasEmail: cdeizue@sima.com.pe Services:New buildings, repairs. Graving Docks: Graving Drydocks DWT L (m/ft) B (m/ft) H (m/ft) 25,000 194/636.4 26/85.3 10.6/34.9 - - - - - - - - Cranage:120t, 45t, 38t, 15t, 10t and 8t Slipway: Slipways Lift (t) L (m/ft) B (m/ft) H (m/ft) 48,000 208/682.4 28.7/94.1-27,000 203/666 34/111.6 - Floating Dry Docks: Floating Drydock Lift (t) L (m/ft) B (m/ft) H (m/ft) 3,800 125.9/410.1 15.5/49.2 10.3/34.6 4,500 115.8/377.2 23.3/75.4 10.6/34.9 1,900 87.8/285.4 13.7/42.6 7.8/25.7 Shiplifts: Shiplifts Lift (tons) L (m/ft) B (m/ft) H (m/ft) 900 - - - SIMA Chimbote Shipyard Av Los Perscadores N 186, Chimbote, Peru Peru Fax: + 51 44350722 jcalizaya@sima.com.pe http://www.sima.com.pe/vi_centchimbote_eng.asp Contact:Shipyard Head: Jorge Calizaya Portal Services:New buildings, repairs Graving Docks: Graving Drydocks DWT L (m/ft) B (m/ft) H (m/ft) 940 64/209.9 12/39.3 5.5/16.4 Floating Dry Docks: Floating Drydock Lift (t) L (m/ft) B (m/ft) H (m/ft) - 110/360.8 - - SIMA Iquitos SRLtda Av La Marina 1177, Distrito de Punchana, Provincia de Maynas, Iquitos, Peru Peru Fax: + 51 94251986 edelascasas@sima.com.pe http://www.sima.com.pe/vi_centiquitos_eng.asp Contact:Head of Operations: Ernesto De Las Casas De La Torre Ugarte Services:New buildings, repairs Graving Docks: Graving Drydocks DWT L (m/ft) B (m/ft) H (m/ft) 350 50/164 10/32.8 5/16.4 1,500 80/262.4 15/42.9 7/22.9 Floating Dry Docks: Floating Drydock Lift (t) L (m/ft) B (m/ft) H (m/ft) 600 52.8/170.6 14.8/45.9 7.7/22.9 Notes:In order to view these shipyards on GoogleEarth, please click on the following link: http://www.amiinter.com/wnpr/google_earth_index.html. http://www.amiinter.com page 12/17 2018 AMI International

Modernization Rewritten March 2018 The Peruvian Navy or Marina de Guerra del Perú (MGP) is rebuilding its fleet to increase operational capabilities, address emerging threats and new mission requirements levied upon it. Although Peru does not have a direct military threat, modernization planning is to counter the growing narco-terrorist threat in the region and supports integration with other regional countries supporting counter-drug operations as well as further develop its shipbuilding infrastructure. Considering the MGP s modernization program goals and limited funding, the MGP will complete portions of these modernization programs in a piece-meal manner with some platforms receiving comprehensive modifications while others have limited upgrades in specific mission areas. The sea service will procure new construction vessels as well as ships from the used international market up upgrade the fleet. Where able, the MGP will use indigenous technology to replace existing systems and equipment. The MGP will continue to require foreign assistance supporting combat systems installation and integration. Major modernization programs: Submarines: Angamos (Type 209/1200) Submarine: In 2016, Servicios de la Marina (SIMA) Peru signed contracts with ThyssenKrupp Marine Systems (TKMS) and Elbit Systems to upgrade the MGP s four Angamos class submarines. TKMS received a US$44.8M contract on 16 September 2016 and Elbit Systems received a contract (undetermined amount) on 2 June 2016. The entire modernization effort will cost US$312M. The units that will receive the modernization effort include the BAP Angamos (S31), BAP Antofagasta (S32), BAP Pisagua(S33) and BAP Chipana (S34). All were commissioned between 1980 and 1984. The two units known as the Islay class, Islay (S35) and Arica (S36), will not be covered under this contract having completed an upgrade package in 2013. The TKMS and Elbit contracts follow the 2015 international tender for the modernization of four of the six Angamos/Islay class submarines. The MGP has been planning this upgrade since 2013. The four Angamos class submarines midlife refit will extend the service life approximately 15 years. The first submarine to receive this upgrade is BAP Chipana (S34) at SIMA Callao Shipyard beginning in late 2017. Refit activities are expected to include: Repair and preservation of the hull, shafts and propellers. Crew habitability improvements. Replacement of batteries. Overhaul of the four MTU 12V 483 AZ80 GA31L diesel engines, four Siemens alternators and one Siemens motor. Upgrade of the SEPA Mk 3 weapon control system. Upgrades or replacement of the sonar, navigation and communications suites. Replacement of the masts and periscope with Hensoldt Optronics SERO 250S and 250A. Replacement of the SST4 torpedoes with the AEG 264 heavyweight torpedo. Addition of anti-ship missiles. Replacement of the current ESM system with the Elbit Timnex II ESM suite. TKMS as prime contractor will cover technical advice and assistance in separating the hull in two parts, enabling Peru to conduct the modernization or replacement of systems as well as logistic and technical support over the next 7 years to 2025. Prime candidates for an anti-ship missile capability are the Boeing UGM-84 Sub Harpoon, the MBDA SM-39 Exocet and the LIG Nex 1 SSM-770K Seastar. This modernization program is to ensure the MGP has a viable submarine force to meet existing threats until its next generation submarine enters service. The MGP will require foreign assistance to complete engineering and combat systems installation and integration activities. BAP Islay (SS35) and BAP Arica (SS36) completed a similar modernization program in 2008 and 2013. The four Angamos class vessels are to remain in service until the 2030 timeframe while the older Islay class is expected to be decommissioned by 2024. With BAP Chipana starting its refit in 2017 it will conclude in 2019. The three follow-on units will follow at two-year intervals with the entire class being modernized by 2025. It is worthy to note that SIMA Callao received a new synchro lift delivered by TTS Syncrolift AS of Norway, a covered hall for submarine repairs and a new drydock in preparation for the Angamos refit program. Surface Combatants: Aguirre (Lupo) Class Frigate: The four Aguirre class frigates, Aguirre (FM55), Palacios (FM56), Bolognesi(FM57) and Quinones (FM58) are undergoing a major mid-life refit to extend service life into the next decade. This modernization effort includes: Replace existing Otomat/Teseo Mk 2 anti-ship missiles with the Exocet MM40 Blk 3. Replace SPS-774 (RAN 10S) radar with the Selex Kronos 3D air/surface search radar. Installation of a Northrop Grumman Vision Master navigation radar. Replace existing combat management system with the indigenous VARAYOC CMS. Replace SCLAR decoy system with the Rheinmetall MASS countermeasures system. Installation of a new indigenous QHAWAX ESM suite. Upgrade to the Mk 95 Mod 1 fire control system. Upgrade to 127mm gun mount. Modifications to flight deck and facilities to operate the Kaman SH-2G Seasprite helicopter (acquired from New Zealand) In the future, the MGP may replace the existing NATO Sea Sparrow missile system with the Mk 57 Mod 10 system (with the RIM-7 NATO Sea Sparrow Missile acquired under a separate purchase request). BAP Aguirre (FM55) and BAP Bolognesi (FM57) have completed work at SIMA Callao shipyard and have returned to an operational status. The two remaining frigates, BAP Palacios (FM 56) and BAP Quinones(FM58) are to complete a similar upgrade. The start date for the mid-life upgrade has not been announced and may have been delayed to accommodate the Carvahal class modernization program. The refit will ensure the two Lupo class frigates, BAP Aguirre and BAP Bolognesi will be able to remain in service until the 2030 timeframe. Carvahal (Modified Lupo) Class Frigate: The sea service is planning to conduct a mid-life upgrade for two of its three Carvahal class frigates, BAP Almirante Grau (ex-montero) (FM53) and BAP Mariategui (FM54). This refit will be similar to the one used for the Aguirre class. Work is expected to include: Replace SPS-774 (RAN 10S) radar with the Selex Kronos 3D air/surface search radar. Replace existing combat management system with the indigenous VARAYOC CMS. Replace SCLAR decoy system with the Rheinmetall MASS countermeasures system. Installation of a new indigenous QHAWAX ESM suite. Upgrade to 127mm gun mount.b Both vessels have previously received the Exocet MM40 Blk 3 missile system, replacing the existing Otomat/Teseo Mk 2 anti-ship missiles. Source indicates the Carvahal class upgrade may take precedence over the Aguirre class modernization program previously mentioned. If so, the modernization program for the last two Aguirre class frigates will be delayed allowing sufficient time for the newer Carvahal class to be completed at SIMA Callao. Now that the ex-montero was designated as the MGP s flag ship, her refit will likely take precedence and could start in 2018. Pohang Class Corvette: Future upgrades for the Pohang class corvette, BAP Ferré (211) include the installation of the VARAYOC CMS and the Mage QHAWAX ESM suite. The former Republic of Korea Navy (ROKN) Pohang class corvette, Gyeongju (758) was commissioned into the MGP for the Coast Guard and renamed BAP Ferré (211) on 21 July 2016. As part of the pre-transfer modernization program, BAP Ferré received the following: Hull, mechanical and electrical (H,M&E) maintenance, repair and preservation. Overhaul of GE LM 2500 gas turbine and MTU http://www.amiinter.com page 13/17 2018 AMI International

12V 956 TB82 diesel engines. Habitability upgrades to mess facilities and berthing areas. Installation of a sickbay. The overall weapon and sensor fit installed on the Gyeongju will remain on board BAP Ferré with the exception of the MM38 Exocet surface-to-surface missile (SSM) system, the Mk 32 triple mount torpedo tubes and associated equipment. With the delivery of the 1200-ton BAP Ferré to the GP, it provides the force with another blue water platform to patrol Peru s EEZ and territorial seas and conduct maritime interdiction operations. The vessel will likely remain in service for 15 years to the 2032 timeframe. Auxiliaries: Amsterdam Class Combat Support Ship: The sea service is moving forward with plans to further upgrade its Amsterdam class AOR (ex-amsterdam (A836)), BAP Tacna (ARL 158) acquired from the Royal Netherlands Navy (RNlN) in 2014. Combat systems upgrades will further integrate BAP Tacna with the MGP fleet. Upgrades include: Installation of the indigenous VARAYOC combat management system (CMS). Installation of a Mage QHAWAX ESM suite. Installation of remotely operated M2 12.7mm gun systems. This upgrade for BAP Tacna could start as early as 2018. Paramilitary: AMI is not aware of any ongoing modernization activity for the Guardacostas del Perú (GP) or Peruvian Coast Guard, other than normal upkeep. The Peruvian Navy or Marina de Guerra del Perú (MGP) is rebuilding its fleet to increase operational capabilities, address emerging threats and new mission requirements levied upon it. Although Peru does not have a direct military threat, modernization planning is to counter the growing narco-terrorist threat in the region and supports integration with other regional countries supporting counter-drug operations. As part of this modernization effort, the country is working with European and Asian suppliers to assist in further developing its shipbuilding infrastructure. Considering the MGP s modernization program goals and limited funding, AMI assesses that the MGP will complete portions of these modernization programs in a piece-meal manner with some platforms receiving comprehensive modifications while others have limited upgrades in specific mission areas. Where able, the MGP will use indigenous technology to replace existing systems and equipment. The MGP will continue to require foreign assistance supporting combat systems installation and integration. Major modernization programs: Marina de Guerra del Perú (MGP Peruvian Navy): Submarines: Angamos/Islay (Type 209/1200) Submarine: Four Angamos class Type 209/1200s are to undergo a mid-life refit to extend service life approximately 15 years. The four submarines, Angamos (S31), Antofagasta (S32), Pisagua (S33) and Chipana (S34) were commissioned between 1980 and 1984. Refit activities are expected to include: Hull, mechanical and electrical (H,M&E) maintenance, repair and hull preservation. Replacement of batteries. Upgrade to combat systems to include replacement of the weapons control system with the Sepa Mk 3 suite. Upgrades to sonar, navigation and communications suites. Replacement of masts and periscopes. Replacement of SST4 torpedoes with the SUT Mod 3. This modernization program is to ensure the MGP has a viable submarine force to meet existing threats until its next generation submarine enters service beginning around the 2020 timeframe. The MGP will require foreign assistance to complete engineering and combat systems installation and integration activities. AMI assesses that the MGP will seek a joint venture with a foreign builder and look to upgrade Peruvian shipyard capabilities and improve technical expertise. BAP Islay (SS35) and Arica (SS36) completed a similar modernization program in 2008. The four Angamos class vessels are to remain in service until the 2030 timeframe while the older Islay class are expected to be decommissioned by 2024. Surface Combatants: Aguirre (Lupo) Class Frigate: The four Aguirre class frigates, Aguirre (FM55), Palacios (FM56), Bolognesi (FM57) and Quinones (FM58) are undergoing a major mid-life refit to extend service life into the next decade. This modernization effort includes: Replace existing NATO Sea Sparrow missile system with the Mk 57 Mod 10 system (with the RIM-7 NATO Sea Sparrow Missile acquired under a separate purchase request). Replace existing Otomat/Teseo Mk 2 anti-ship missiles with the Exocet MM40 Blk 3. Replace SPS-774 (RAN 10S) radar with the Selex Kronos 3D air/surface search radar. Replace existing combat management system with the indigenous VARAYOC CMS. Replace SCLAR decoy system with the Rheinmetal MASS countermeasure system. Installation of a new indigenous QHAWAX ESM suite. Upgrade to the Mk 95 Mod 1 fire control system. BAP Aguirrre (FM55) is about to complete sea trails following its refit, while BAP Bolognesi (FM57) is in final stages of work at the SIMA Callao shipyard and is expected to begin its sea trails around 2015. The two remaining frigates are to complete a similar upgrade by 2016. Verlarde (PR-72P) Class Fast Attack Craft: The Verlarde class FAC have begun a fire control systems refit. Each of the six vessels are to receive the same indigenous CMS and ESM suite as the Aguirre class frigates. The upgrade is expected to start by 2015. Also, three FAC, Velarde (CM21), De Los Heros (CM23) and Larrea (CM25) will receive new diesel engines by 2014. The other three vessels Santillana (CM 22), Herrera (CM24) and Sanchez Carrion (CM26) received a similar upgrade in the 2000 timeframe. Paramilitary: Guardacostas del Perú (GP) or Peruvian Coast Guard: Carvahal (Modified Lupo) Class OPV: The former MGP Carvahal class frigate, BAP Carvahal (FM51) was converted to an OPV and had all its weaponry removed excluding the 127mm gun and the two 40mm twin guns. The vessel was subsequently transferred to the GP in 2013. A second Lupo class frigate, BAP Villavisencio (FM52) will undergo the same refit program and be transferred to the GP in 2015. http://www.amiinter.com page 14/17 2018 AMI International

Rewritten: March 2018 The Peruvian Navy - Peruvian Navy or Marina de Guerra del Perú (MGP) comprises approximately 72 vessels. It has a number of submarines, major and minor surface combatants, amphibious vessels and auxiliaries that are past their effective service life and in need of replacement. Due to limited procurement funding, these vessels are expected to remain in service for the foreseeable future until replacements can be obtained or the aging vessels are no longer economically feasible to maintain. The Peruvian Coast Guard (Guardacostas del Perú (GP)) is subordinate to the MGP and comprises 54 vessels, including offshore patrol vessels (OPVs), patrol boats and craft. Decommissionings De Ruyter Class Cruiser: The MGP decommissioned the De Ruyter class CG, BAP Almirante Grau (CLM 81) on 27 September 2017. The original ZrMs Almirante Grau (CLM 81) was a De Ruyter class cruiser transferred from the Royal Netherlands Navy (RNlN) in 1973 where it was originally commissioned into service in 1953. The new flagship of the Peruvian Navy will now be the Carvajal (Modified Lupo) class frigate, BAP Montero (FM 53). On 26 September 2017, the vessel was renamed Almirante Grau (FM 53). Prospective Decommissioning: Humboldt Class Oceanographic Research Vessel: The MGP plans to decommission the polar-capable Humboldt class AGOR, Humbodt now that it has commissioned its new AGOR, BAP Carrasco (BOP 171) on 22 March 2017. BIC Humboldt was built locally at SIMA Callao and commissioned into service on 25 January 1980. one. Prospective Decommissionings: 1. Angamos/Islay (Type 209/1200) Class Submarine: The six Angamos/Islay class diesel-electric submarines have been in service for over 30 years and will probably be replaced after 2020 and scrapped. 2. De Ruyter Class Cruiser: The De Ruyter class cruiser (Almirante Grau CLM 81) has been in service for approximately 50 years. Before it was commissioned into service with the MGP in May 1973, the vessel was entered service with the Royal Netherlands Navy (RNlN) in 1953. Reportedly, the Aguirre class Frigate (Aguirre FM55) is to assume duties as flagship for the MGP. Once this transition is complete, AMI assesses that the Almirante Grau will be decommissioned from active service and scrapped. 3. Verlarde Class Fast Attack Craft: The six Verlarde class FAC have been in commission since the 1980-1 timeframe and are expected to be replaced during the latter half of this decade. The vessels will likely be decommissioned on a one-for-one basis as they are replaced by a follow on FAC design. Due to their condition, the Velarde class may be sold on the international market. 4. Paita Class Landing Ship: The MGP currently operates four ex-terrebonne Parish class tank landing ships (LSTs) that were initially commissioned into the US Navy in 1953. These vessels are expected to be replaced in the 2016-18 timeframe and decommissioned from active naval service. Transfer None. Receipts ROKN Pohang Class Corvette: The former Republic of Korea Navy (ROKN) Pohang class corvette, Gyeongju (758) was commissioned into the MGP for the Coast Guard and renamed BAP Ferré (211) on 21 July 2016. This transfer was part of a 2013 agreement between the MGP and ROKN for the anticipated transfer of at least one Pohang class corvette (with technical materials and training) to be decommissioned from the ROKN fleet. As part of the pre-transfer modernization program, BAP Ferré received the following: Hull, mechanical and electrical (H,M&E) maintenance, repair and preservation. Overhaul of GE LM 2500 gas turbine and MTU 12V 956 TB82 diesel engines. Habitability upgrades to mess facilities and berthing areas. Installation of a sickbay. The overall weapon and sensor fit installed on the Gyeongju will remain on board BAP Ferré with the exception of the MM38 Exocet surface-to-surface missile (SSM) system, the Mk 32 triple mount torpedo tubes and associated equipment. With the delivery of the 1200-ton BAP Ferré to the GP, it provides the force with another blue water platform to patrol Peru s EEZ and territorial seas and conduct maritime interdiction operations. The vessel will likely remain in service for 15 years to the 2032 timeframe. A second Pohang class corvette is to be transferred to Peru, probably in 2018. http://www.amiinter.com page 15/17 2018 AMI International

Key Defense Organization Personalities Mr. Jorge Nieto Montesinos Minister of Defense Ministry of Defense Jesus Maria- Lima Peru Phone: + 511 209 8530 Annex 4001 despacho@mindef.gob.pe General Leonel Cabrera Pino Chief of the Armed Forces Joint Command Ministry of Defense Phone: + 51 14 33 6886 Admiral Gonzalo Nicolas Rios Polastri Commander General of the Navy Peruvian Navy Phone: + 51 14 634 447 Fax: + 51 14 628 695Notes: https://www.marina.mil.pe/page/organigrama Vice Admiral Victor Emanuel Pomar Calderon Chief of the Naval Staff Peruvian Navy Phone: + 51 14 634 447 Fax: + 51 14 628 695 Vice Admiral Manuael Santiago Morey Vascones Director General of Captaincy and Coast Guard Peruvian Navy Vice Admiral Fernando Raul Cerdan Ruiz General Commander of Pacific Operations Peruvian Navy Vice Admiral James Guido Thornberry Schiantarelli Directorate of Material - Peruvian Navy Defense Acquisition Phone: +51 207 8900 514 2930 http://www.amiinter.com page 16/17 2018 AMI International

Projects from Peru Auxiliaries Future Fleet Replenishment Ship (AOR) Light Icebreaker (AGB-L) Combatants Future Frigate Patrol Vessels Coast Guard Pativilca Class (STX 500-Ton) Patrol Boat River Patrol Boat (Helicopter Capable) Submarines Future Submarine http://www.amiinter.com page 17/17 2018 AMI International