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Cablegate: Discussing U.S. Views On Debt Relief, Mca With

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS LIMA 001331

SIPDIS

DEPT FOR WHA/EPSC, WHA/AND, EB/IFD/ODF

E.O. 12958: N/A
TAGS: EAID ECON EFIN SOCI PGOV PE
SUBJECT: DISCUSSING U.S. VIEWS ON DEBT RELIEF, MCA WITH
PERUVIAN FOREIGN MINISTRY

REF: STATE 31823

1. Acting EconCouns delivered on March 15 reftel demarche,
outlining U.S. views on debt relief for poor countries, to
Minister Counselor Cesar de las Casas of the Office of
Commercial Promotion at the Ministry of Foreign Relations.
De las Casas was accompanied by Vivian Weiner of APCI, the
Peruvian Agency for International Cooperation.

2. Acting EconCouns passed to the officials and explained
the U.S. proposal in reftel favoring up to 100 percent
relief for IDA and AfDF debt for eligible HIPC countries and
opposing recent UK proposals on debt relief and creation of
an International Financing Facility (IFF). De las Casas,
who had not heard of the proposals, thanked Acting EconCouns
for the information. Weiner was aware of the proposals. De
las Casas had no immediate comment on the U.S. plan, other
than to express approval that it would not affect
multilateral lending to non-HIPC countries such as Peru. He
added that he would share the information with other Foreign
Ministry officials.

3. Acting EconCouns then turned the conversation to
Millenium Challenge Account (MCA) progress, passing to the
officials the press release announcing the signing of the
first MCA compact March 14 with Madagascar. He reviewed MCA
funding trajectories and explained how Peru would become an
MCA candidate country in FY-06, noting that, according to an
analysis conducted by USAID and shared with the GOP, Peru
barely meets a majority of MCA criteria in each of the three
policy categories of ruling justly, investing in people and
economic freedom.

4. Weiner responded that APCI and the Prime Minister's
office have been working with USAID on the topic of the MCA.
As a result, the GOP has formed an interagency MCA working
group on the topic. The group met for the first time March
14, and decided to conduct an inventory of where Peru does
and does not meet existing MCA criteria, and discuss
possible projects that could be included in an MCA compact.
She related that the working group is led by staff from the
Prime Minister's office, while she represents APCI and is
the working group's executive secretary. Also participating
are representatives from the Ministry of Economy and
Finance, the Minister of Women and Social Development, the
National Competitiveness Council and the Peruvian Congress.
Weiner added that the next working group meeting on March
28, and future meetings, would likely be open to outside
participation.

5. De las Casas asked how long countries are taking to
qualify for MCA funding, given that the first compact has
only just been signed. He explained that it would be a
great political boost to the Toledo government to complete
an MCA compact before President Toledo's term ends in April
2006. Weiner expressed skepticism that this was possible,
and Acting EconCouns agreed that this is uncertain. Both
Peruvian officials underscored that the GOP is working hard
to ensure it will be a strong contender for MCA funding next
year.

STRUBLE

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