Cablegate: Naming of Kuczynski Cabinet Calms Political

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

UNCLAS SECTION 01 OF 02 LIMA 003555

SIPDIS

E.O. 12958: N/A
TAGS: PGOV PINR ECON SCUL PE
SUBJECT: NAMING OF KUCZYNSKI CABINET CALMS POLITICAL
TURBULENCE

REF: A. LIMA 3549

B. LIMA 3548
C. LIMA 3489
D. LIMA 3476

1. SUMMARY: President Alejandro Toledo's 8/16 swearing-in
of a new Cabinet, headed by Prime Minister Pedro Pablo
Kuczynski (PPK), received a warm welcome from politicians
across the political spectrum, the business sector and the
media; calmed the recent political turbulence; and should
not/not face difficulties obtaining the required
congressional ratification. In fashioning his new Cabinet,
Toledo opted for continuity in economic, social and foreign
policy by promoting experienced technocrats from within the
relevant ministries, while satisfying the patronage demands
of his Peru Posible (PP) party by selecting party militants
for the Defense and Interior portfolios. Bios of the new
ministers of Interior, Housing, and Justice and Finance will
follow septels; bios of the other new ministers have been
sent in Ref B. END SUMMARY.

2. While PPK reportedly was not Toledo's first choice as
Prime Minister (PP legislator and former Congress President
Henry Pease reportedly was sounded out but discarded when he
insisted on naming his own slate of ministers) but he has
proved to be an immensely popular choice. The principal
political figures have saluted his management of the economy,
crediting him with primary responsibility for the GOP's
record of sustained growth, while also recognizing his
personal qualities. Opposition Unidad Nacional alliance
leader Lourdes Flores praised his "moral and political
solvency;" National Solidarity party Secretary General Marco
Parra predicted that PPK would bring, "tranquility to the
economic sector in this electoral year;" and opposition APRA
party Co-Secretary Generals Jorge del Castillo and Mauricio
Mulder spoke favorably of PPK's prior service as Finance
Minister, although they did not/not commit their party's
support for his Cabinet's ratification. Even outgoing
Foreign Minister Fernando Olivera, whose short-lived
appointment sparked ex-Prime Minister Carlos Ferrero's
resignation and the resultant political crisis, openly backed
PPK's appointment, attending the Cabinet swearing-in ceremony
and paying a courtesy call on the new Prime Minister at his
residence.

3. The only sour notes came from the left, with labor
leaders lamenting that PPK would maintain the GOP's economic
policies. Mario Huaman, President of Peru's largest labor
central, the CGTP, complained that, "with this designation
the country does not gain, only the political right wing and
the business class win." Caridad Montes, the Secretary
General of the SUTEP teachers union, which is controlled by
the Communist Party of Peru-Patria Roja, echoed this, stating
that the new Cabinet is, "more of the same." Business
leaders, on the other hand, were effusive with their praise,
with Jose Miguel Morales, President of the most important
business association, CONFIEP, and Luis Vega, head of the
exporters' association ADEX, enthusiastically proclaiming the
positive effects that PPK's appointment will have on economic
confidence and stability.

4. President Toledo took care during his presentation of the
new Cabinet to attempt to mend the wounds and hurt feelings
engendered by the previous week's political crisis. Toledo
gave Olivera an affectionate head-hug before the swearing-in
ceremony and referred to him during his speech as a "friend
and partner." The President also recognized the
contributions of former Prime Minister Ferrero and ex-Housing
Minister Carlos Bruce, neither of whom chose to attend the
event.

5. PPK, in his initial press interviews, emphasized that his
priorities are maintaining the positive course on economic
and financial policy, overseeing transparent elections, and
turning over "a house in order" to the next government in
July 2006. He also stressed his intent to work with
political leaders to achieve these objectives, noting that he
had spoken with opposition leaders Lourdes Flores and Alan
Garcia (APRA) on 8/15, to inform them of his pending
appointment and obtain their views.

5. COMMENT: The Kuczynski Cabinet has something for
everyone. There is continuity in the GOP's economic, social
and foreign policies with PPK as Prime Minister; the new
ministers of Finance, Justice, Foreign Affairs and Housing
all being technocrats promoted from within; while the former
ministers of Health, Labor, Transportation/Communications,
Production, Foreign Trade, Energy & Mines, Agriculture,
Womens Affairs and Education remain at their posts. There is
also increased participation by the "Hard Wing" of the
President's Peru Posible party, with the appointments of
Romulo Pizarro and Marciano Rengifo at the Interior and
Defense Ministries. Additionally, PPK, who personally is
close to Olivera, seems to have helped smoothe over the bad
blood resulting from the latter's preemptory ouster as
Foreign Minister, thereby preserving the Peru Posible -
Independent Moralizing Front coalition. The new Cabinet
should not/not face difficulties in obtaining Congress'
approval (required within 90 days); the opposition APRA party
may withhold its support, but it almost certainly will
not/not try to block the ratification, particularly as APRA
leader Alan Garcia was publicly engaged in a political
flirtation with Kuczynski a mere week ago. END COMMENT.
STRUBLE

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