The Latin America country isn't in any conflict with neighbors but faces an increasingly violent threat from what the security agencies call "narcoterroists."
The category covers a range of criminal and militant groups engaged in drug smuggling to finance their continuing operations, following orders from more powerful gangs or simply using militancy as a source of livelihood in the impoverished Amazon region.
Peruvian President Ollanta Humala announced extensive military reforms last year and signed approvals for major upgrades to military inventories, including naval units that play an increasing role combating activity along the cocaine trail to North America.
Naval missile systems, trainer aircraft and helicopters are all on the president's shopping list.
A consortium of Israel's Rafael Advanced Defense Systems, the Polish Bumar Group and Northrop Grumman of the United States won the $140 million contract to supply an air defense system.
Northrop will deliver three AN/TPS-78 radars with a range of 270 miles and Rafael will supply Spyder short-range and medium-range surface-to-air systems fitted with Python 5 and Derby beyond-visual-range missiles.
Bumar will deliver six Poprad self-propelled air defense systems and 150 Grom surface-to-air missile launchers with a range of about 3 miles, the Bumar group said in a statement issued in Warsaw.
The latter two missile systems are also used by the Polish army.
"The complete air defense system is scheduled for delivery to the Peruvian armed forces in 24 months after the contract is signed," the Bumar statement said.
Other bidders for the Peruvian contract included Russia's leading arms exporter, Rosoboronexport, and a consortium of Chinese defense manufacturers.
The Peruvian military initially invited bids from some 20 defense companies, Bumar said.
Upgrades to Peruvian naval assets were reported earlier.
Italian-built Lupo class frigates form the high-end of Peru's naval defenses, with eight of the 3,000-ton Carvajal class ships said to be in service with varying stages of operational efficiency.
Four of the vessels were built under license from 1984-87, while the second batch of four frigates was decommissioned by the Italian navy and sold to Peru in 2004-06.
Most of the upgrades are likely to affect the second batch of the ships, which includes the fourth ship bearing the name BAP Bolognesi, named in honor of Peruvian military hero Francisco Bolognesi. The first ship, Almirante Grau class cruiser BAP Coronel Bolognesi, was commissioned in 1907.
Like the air defense modernization, the naval upgrade is part of an overall strategy to build defenses against increasingly sophisticated and heavily armed drug gangs. Peru is the world's largest producer of coca, which is used to produce cocaine.
The upgrades to the BAP Bolognesi (FM-57), commissioned in 2006, will add new electronics, radar and decoy countermeasures to ship's arsenal. Some reports said Peru might also replace the Italian Otomat anti-ship missiles on the frigates with French Exocet MM40 Block III missiles.
Last year the U.S. Defense Security Cooperation Agency said Peru asked to buy four NATO Sea Sparrow MK57 MOD 10 systems that will replace its existing MOD 2 systems mounted above the helicopter hangar on the four ex-Italian ships from the second batch. The vessels include FM 55-58: BAP Aguirre, BAP Palacios, BAP Quinones besides BAP Bolognesi.
The agency, in its notification to U.S. Congress, said the $50 million sale will "improve Peru's capability to meet current and future threats of enemy anti-ship weapons," the agency said. "Peru will use the enhanced capability of the MK57 MOD 10 NSSMS on its four Lupo class frigates purchased from Italy in 2004."
The frigates have MK57 MOD 2 NATO Seasparrow Systems modified to fire the Aspide air defense missile. The systems retain the ability to fire the RIM-7 Seasparrow missile and Peru intends to move from the Aspide missile to the RIM-7 Seasparrow in a future purchase.
Peru already has MK 57 Missile Systems and will have no difficulty absorbing the additional systems into its inventory, the agency said.
Raytheon Technical Service Co. and Raytheon Integrated Defense Systems are among contractors for the system.
Humala is trying to calm coca growers as he implements new defenses against cocaine traders. Coca growing is an ancient tradition in Peru. Humala is the latest Peruvian head of state to confront the challenge of severing the link between traditional coca agriculture and cocaine production.