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Cablegate: Negroponte Visit: Civil Society Groups Say

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R 141509Z MAY 07
FM AMEMBASSY LIMA
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INFO RUEHBO/AMEMBASSY BOGOTA 4656
RUEHBR/AMEMBASSY BRASILIA 7341
RUEHCV/AMEMBASSY CARACAS 0375
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RUMIAAA/CDR USCINCSO MIAMI FL

UNCLAS LIMA 001725

SIPDIS

SENSITIVE
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E.O. 12958: N/A
TAGS: PGOV PINR PHUM VE PE
SUBJECT: NEGROPONTE VISIT: CIVIL SOCIETY GROUPS SAY
SPREADING PROSPERITY, STRENGTHENING INSTITUTIONS, PASSING
PTPA KEY


--------
Summary:
--------

1. (SBU) Deputy Secretary Negroponte met with civil society
representatives at the Ambassador's Residence on May 10.
They discussed the challenges in converting Peru's economic
growth into generalized prosperity; the strengths and
weaknesses of the Peruvian state and Garcia's governing
style; Peru's continued vulnerability to radicalism,
including Hugo Chavez' influence; and the importance of the
Peru Trade Promotion Agreement (PTPA). The diverse group
agreed that Peru has moved a long way down the path to
democracy and development, that the state's lack of capacity
is the country's Achilles Heel, and that the PTPA is
essential to sustaining the momentum of the country's
modernization. End Summary.

2. (U) D/S Negroponte met with a variety of civil society
representatives at the Ambassador's Residence on May 10. In
attendance were: businessman Jose Miguel Morales; National
Ombudsman and former Toledo Government Prime Minister Beatriz
Merino; President of the National Educational Council
Patricia Salas; cosultant Jaime Garcia; leader of the
pro-transparency activist Beatriz Boza; and Catholic
University Rector Salomon Lerner.

---------------------------------
Converting Growth into Prosperity
---------------------------------

3. (SBU) All participants agreed Peru must now convert
economic growth into more generalized prosperity. Jose
Miguel Morales said the country is reaping benefits from
fifteen years of relative macroeconomic stability through the
Fujimori, Paniagua, Toledo and now the Garcia Presidencies.
Morales drew a distinction between the Fujimori dictatorship
and his democratic successors, but noted the macroeconomic
constants all had maintained. As a consequence, the internal
market has grown, tax revenues are running strong, and both
national and regional government coffers are fuller than they
have been in decades. The poor, however, particularly those
in rural areas, are not perceiving benefits quickly enough.

---------------------------------------------
The GOP Has Strengths But Also Key Weaknesses
---------------------------------------------

4. (U) Participants ascribed the gap between growth and
perceived benefits to the weaknesses of the Peruvian state.
Some parts of the central government, such as the tax
collection agency (SUNAT), Customs, the Central Bank, work
well. Others utterly lack capacity, particularly in their
ability to provide needed infrastructure -- roads, schools,
health clinics, police protection -- to needy populations.
The same applies to regional governments, they said. There
is a severe shortage of trained technocrats who can implement
the visible, concrete infrastructure projects the population
craves.

------------------------------------------
The Pluses and Minuses of the Garcia Style
------------------------------------------

5. (SBU) All recognized that the Garcia administration was
maintaining the country's macroeconomic balance and its
democracy. Nonetheless, they criticized certain aspects of
the President's leadership. Several noted that Garcia and
his Prime Minister, Jorge del Castillo, too often play the
role of "firemen," i.e. they use central government resources
to respond to day-to-day crises and to local demands. In the
short term, they look like problem-solvers. Over the long
term, this kind of presidentialism/centralism is not
sustainable. Peru needs to develop mediating institutions --
stronger political parties, more capable regional and local
governments -- that can enable regions and localities to
solve their own problems without summoning a Minister from
Lima, usually by means of a violent protest.

6. (SBU) Other Garcia administration practices can be
problematic. Several participants maintained that one of the
President's popular austerity measures -- cutting government
salaries across the board -- have driven talented technocrats


from government. Moreover, the state needs to grow its
presence in underserved regions. To do that, the GOP should
work with local NGOs and other civil society organizations.
Instead, Salomon Lerner lamented, the GOP has "demonized" the
NGOs. (Note: Lerner referred to a recent NGO law that many
in civil society regard as hostile to their organizations.
End Note.)

--------------------------------------------- -
Despite Growth, the Radical Temptation Remains
--------------------------------------------- -

7. (SBU) Radical elements stand ready to reap advantage from
the gap between economic growth and generalized prosperity.
Morales alleged that the Regional President (state governor)
of Puno has received USD 4 million from Venezuela's Hugo
Chavez to spend on schools and infrastructure. Chavez' money
can be put right to work. In contrast, regional authorities
have to get GOP approval for GOP-financed projects, an
essential measure to ensure quality control but that also
creates delays that Chavez can exploit.

8. (SBU) Analyst Jaime Garcia noted that remnants of Sendero
Luminoso have fused with the narcotraffickers, creating a
narco-terrorist nexus. Possibly even worse, narcotics
production has become woven into the economies of some of the
country's poorest regions. Jaime Garcia maintained that in
Ayacucho, for example, narcotrafficking accounts for almost
half of the region's agricultural economy.

9. (U) Fragmented local political and social movements also
constitute a problem. Beatriz Merino remarked that the
Ombudsman tracks scores of social conflicts throughout the
country, the majority of them led by provincial interests
that protest in short-term, self-destructive ways. Striking
teachers in Loreto, for example, have closed down the
airport, cutting off local tourism. Morales remarked that
Peru needs to build more dams to even out its water supply,
which oscillates between summer droughts and winter floods,
but that highland residents have so little trust in outside
interests that they won't consent to the projects.

-----------
PTPA is Key
-----------

10. (U) The diverse group agreed that the Peru Trade
Promotion Agreement (PTPA) would provide essential
reinforcement for the positive trends that have moved Peru
forward. Morales noted how the high labor standards
maintained by importers in countries like the U.S. help
Peruvian workers. Several interlocutors said access to
foreign markets would bring more prosperity to the country's
interior. They added that, despite the state's limited
capacities, thanks to booming exports -- which the PTPA would
sustain -- the GOP has resources to direct at social problems.

--------
Comment:
--------

11. (U) The most striking thing about his diverse group --
which ranged from business figures to human rights activists
-- was their strong consensus. All agreed that Peru has
moved a long way down the path to democracy and development,
that the state's lack of capacity is the country's Achilles
Heel, and that PTPA is essential to sustaining the momentum
of the country's modernization.
STRUBLE

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