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Cablegate: Decentralization: Making Democracy Work in Peru,

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



E.O. 12958: N/A
PT 2

REF: A. 03 LIMA 5143
B. 03 LIMA 4668
C. 03 LIMA 0253

1. This is the second in a two-part series on Peruvian
decentralization. It focuses on the 10/30 referenda on
forming macro-regions, current opinions, and possible


2. SUMMARY. On the eve of the 10/30 referenda on the
formation of macro-regions, the GOP finds itself at a
critical juncture in its attempt to decentralize and extend
democratic institutions to the local and regional levels.
Sixteen of 25 departments will vote on whether or not to
consolidate and form five macro-regions. Polls indicate a
significant number of undecided voters and few instances of a
clear majority necessary for consolidation. Seven of the 16
regional presidents have switched from supporting to opposing
the referenda. The results of the referenda will determine
the future direction of Peru's decentralization reform.
Should one or more of the five referenda pass, the reform
will gain momentum as the new macro-region(s) will receive
increased funding and could become more attractive to
investors. If the referenda fail, then the existing
decentralization process will require a comprehensive
re-think by the GOP and political parties. END SUMMARY.

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3. A major critique of previous decentralization attempts was
that the Central Government formed regions through mandates
and not democratic consultation. In response, the current
decentralization law mandates that the macro-regions be
created through three referenda held in 2005, 2009 and 2013.
Macro-region formation requires the individual regional
governments to negotiate mergers that respect social and
economic development criteria laid down by the GOP. Proposals
are then submitted to the National Decentralization Council
(CND) for approval before being sent to a referendum.

4. Five potential macro-regions have completed the
requirements and are part of the 10/30 referenda: 1) the
Northern Region (Tumbes, Piura, Lambayaque), 2) The Northern
Central East Region (Ancash, Huanuco, Lima Provincias, Pasco,
and Junin); 3) the Ica-Ayacucho-Huancavelica Region; 4) the
Apurimac-Cuzco Region; and 5) the Arequipa-Puno-Tacna Region.
The referenda votes will occur in each of the 16 departments
considering consolidation.


5. The referenda are plagued by a lack of knowledge by the
electorate on the issues and by legal ambiguity on some of
the implementing details. CND President Luis Thais publicly
acknowledged that the GOP's publicity campaign has been
relatively ineffective, estimating the week before the vote
that 25 percent of the electorate is unaware of the
referenda, much less of the issues at stake.

6. In anticipation of the referenda, some critical details
remain undecided and Congress, as of 10/27, continues to
consider legislation to address these shortfalls. For
example, the current legislation requires that a "yes" vote
in each department requires a 50 percent-plus-one majority,
but is vague as to whether this means of all registered
voters or of just those who voted, whether in calculating the
vote only "yes" and "no" ballots are counted, or whether
blank or null ballots are included in the count.

7. It also remains uncertain what the result will be if
some, but not all, of the prospective members of a
macro-region vote "yes" and one or more vote "no." Will
those voting "yes" constitute a macro-region, or is unanimity
required? Finally, the locations of the capitals of any new
macro-region are not defined, nor does existing legislation
address the distribution of seats on any of the new regional
councils. Since these are issues that could influence
voters' decisions as to how they will cast their ballots, the
absence of clear definitions may well prejudice the chances
of a "yes" vote in many departments.

8. President Toledo has been a strong proponent of a "yes"
vote, and opposition party leaders Lourdes Flores (Unidad
Nacional alliance) and Valentin Paniagua (Accion Popular)
have recently joined the chorus. The opposition APRA party,
on the other hand, has long pressed for the referenda to be
postponed, arguing that the decentralization process needs to
be better planned and implemented before proceeding to the
formation of macro-regions.

9. APRA leader Alan Garcia has urged all eligible voters to
go to the polls. He has also stated that his party is
neutral on the referenda as a whole, leaving it up to each of
the APRA regional presidents to decide whether a particular
referendum stands to benefit his region. Five of the seven
APRA regional presidents whose departments will be voting on
Sunday have switched from prior support to active opposition
to the referenda affecting their regions. (COMMENT: Some
critics charge that Garcia's "hands-off" policy is just an
attempt to camouflage an APRA decision to de-rail the
decentralization process, positing that the party is
concerned that it would not/not control the new macro-regions
and therefore would enjoy reduced patronage opportunities.

10. It remains unclear how many of the macro-region
referenda will pass. The polls to date indicate that only 7
of 16 departments will vote "yes," and at least one
department in all of the proposed macro-regions will vote
"no." Political and media observers suggest that the best
prospects for new macro-regions are in the north, with Piura
and Lambayeque (but probably not Tumbes) forming one
macro-region, and in the south, with Arequipa and Puno
joining forces. Ica seems to be firmly in the "no" camp, and
without its participation (and coastal access), the union of
the other two macro-region candidates Ayacucho and
Huancavelica, would not make sense.


11. The results of the referenda will determine the future
direction of Peru's decentralization reform. Should one or
more of the five referenda pass, the new macro-region(s) will
become pilot projects, enjoying increased funding, receiving
preferential attention from the GOP, and attracting enhanced
interest from potential investors, foreign and domestic. If
the referenda fail, then the existing process will require a
comprehensive re-think by the GOP, Congress and the political
parties, with the issue of decentralization's future likely
becoming an issue in the upcoming general elections. END

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