Cablegate: Garcia Government: Honeymoon Over, Time for Results

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RR RUEHWEB

DE RUEHPE #1709/01 1311544
ZNR UUUUU ZZH
R 111544Z MAY 07
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC 5408
INFO RUEHBO/AMEMBASSY BOGOTA 4642
RUEHBR/AMEMBASSY BRASILIA 7329
RUEHCV/AMEMBASSY CARACAS 0364
RUEHLP/AMEMBASSY LA PAZ MAY QUITO 1201
RUEHSG/AMEMBASSY SANTIAGO 1264
RUEHBS/USEU BRUSSELS
RUMIAAA/CDR USCINCSO MIAMI FL

UNCLAS LIMA 001709

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PINR PHUM VE PE
SUBJECT: GARCIA GOVERNMENT: HONEYMOON OVER, TIME FOR RESULTS

REF: A. LIMA 1587

B. LIMA 1413
C. LIMA 1270
D. LIMA 1053
E. LIMA 909

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Summary:
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1. (SBU) The Garcia governmen's extended honeymoon has
ende. In the wake of the Tocache Accords and the Pandolfi
Affair (Refs A-E), the GOP finds itself beset by a series of
protests from cocalero, labor and other groups. At the same
time, the APRA leadership faces increasing patronage
pressures from within the party. While President Garcia's
popularity remains above 50 percent, and his government is
stronger than that of his predecessor, he and his ministers
will have to begin delivering on their promises in order to
deflate rising social pressures. End Summary.

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The Long Honeymoon
------------------

2. (SBU) The Garcia government enjoyed an extended
honeymoon, which has now ended. Its strong start resulted
from a combination of factors. These include the
government's adept crisis management; the President's
skillful packaging of policy proposals (State Austerity,
"Water for All," the "Investment Shock," "the Highlands'
Export Program," Decentralization); and the occasional
pursuit of politically popular proposals (eg., the death
penalty for child sex murderers) that have little concrete
impact. The opposition's fragmentation, particularly the
post-election implosion of Ollanta Humala, and the continued
buoyancy of Peru's economy, which delivered 8 percent annual
growth for 2006, have also contributed to the government's
felicitous beginning.

--------------------------------
APRA Off Game/Protests Break Out
--------------------------------

3. (SBU) The APRA government's own missteps have taken some
of the early bloom off the rose. The ill-considered Tocache
Accords, in which government negotiators agreed to a
cessation of eradication in the Tocache area, and the brief
appointment of former Fujimorista Pandolfi to a high-level
government position constitute previously uncharacteristic
examples of self-inflicted wounds (Refs A-E).

4. (SBU) More important, however, has been surging sectoral
impatience in key areas. While organized opposition to the
government remains weak, outbursts of localized discontent
have increased. In the last several weeks, a series of
protests exemplify this trend. They include:

--The National Federation of Mining, Metallurgy and Steel
Workers called a national strike on April 30. While the
effort fizzled, its principal catalyst -- the presence of
large numbers of "service workers" (subcontracted employees)
in Peru's mining sector -- remains a challenge. Candidate
Garcia had pledged to reform rules for outsourcing during the
2006 presidential campaign, and now the unions are calling
him to account. In response to the criticism and in an
effort to preempt the planned strike, on April 26 the GOP
issued a decree regulating subcontracting in the sector.
(Details septel.)

--Coca growers in Huanuco carried out a 72-hour strike May
2-4. Various labor and civil society groups joined them as
schools and businesses in the region were closed. The
Regional President, who had originally offered to mediate
between the growers and the GOP, publicly supported the
strike. After a May 8 meeting with Prime Minister Jorge del
Castillo in Lima, cocalero representatives called off the
strike. Del Castillo promised to form a permanent
negotiating roundtable to promote development in Huanuco.

--In Piura on May 3, cotton and rice farmers blocked highways
and battled with the police, demanding more money for their
crops. Close to fifty protesters were injured. The strike
ended when the GOP agreed to a number of concessions,
including greater access to loans from the state-run Agrarian
Bank, the purchase of 1,000 tons of rice for the National
Food Aid Program and the installation of new machinery to
improve local cotton production.

--The Loreto Regional Government called a 48-hour strike May
3-4 to pressure the central government to hire an additional
1,000 school teachers in the region. Local civil society
groups backed the measure and the city of Iquitos closed
down. Regional President Ivan Vasquez said that local
organizations are considering calling an indefinite strike if
the central government does not carry out the requested
hirings.

--In Lima, the city government has been trying to close down
a market of informal produce vendors in Santa Anita since
2003. The vendors apparently rented spaces from someone who
falsely represented himself as the owner of the area. When
the city moved to close the market, the vendors occupied the
market and have refused to budge. The protesters have
brought their own children into the protest and into a
possible confrontation with the police. While the city
government is the main actor in this protest, its location in
Lima gives it a high profile.

-----------------------------------
Patronage Pressure From Within APRA
-----------------------------------

5. (SBU) Miners, cocaleros, farmers, teachers and vendors
are not the only special interest groups looking for
government attention. Ruling APRA party militants are
another, potentially more destabilizing one. At the May 7
celebration of the APRA's 83rd anniversary celebration in
Lima, party militants heckled APRA Secretary Mauricio Mulder
for not providing enough government jobs to party loyalists.
To voice their discontent about the lack of jobs, militants
chanted, "APRA is a party of the people, not of the right"
and called for a new party leadership and a return to the
1979 constitution. Many observers have noted that President
Garcia has so far held the line on pressure for patronage
from party loyalists while acknowledging it is likely to rise
over time.

--------------------------
Blaming the Humala Phantom
--------------------------

6. (SBU) The initial reaction to this latest series of
protests was to attribute them to a broader political
conspiracy. Opposition legislator (Unidad Nacional) Javier
Bedoya spoke of a "plot" to destabilize the government. His
charges were echoed by APRA Congressman Javier Velasquez, who
claimed that opposition leader and former Nationalist Party
presidential candidate Ollanta Humala was orchestrating these
protests. Subsequent news reports highlighted these claims
by airing debates about the plausibility of Humala's role in
fomenting instability. President Garcia and Prime Minister
del Castillo discounted this possibility, emphasizing that
Humala does not have the organizational capacity to put
together coordinated protests on such a scale. Many analysts
noted that imputing these scattered conflicts to Humala
risked reviving him from the oblivion into which he has
fallen after his failed bid for the presidency. One local
political cartoon portrayed an embarrassed Humala as thrilled
that he might even be considered capable of launching such a
wide range of actions.

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Comment: Delivering on Promises
-------------------------------

7. (SBU) The recent protests reveal how pent-up social
pressures are building. The GOP has promoted a number of
program initiatives, but both the central government and the
regional governments lack the capacity to execute. As
execution lags, frustrated sectoral leaders take matters into
their own hands. While Peru is no where near the chronic
political fragility that plagued the Toledo Administration --
President Garcia's popularity remains above 50 percent, he
dominates the headlines, and the growing economy has blessed
the GOP with financial resources -- the onset of multiple
protests, following the blunder at Tocache and the Pandolfi
Affair, signals the end of Garcia's long honeymoon. The GOP
increasingly will have to deliver on its promises of change
if it is to stay comfortably ahead of popular discontent.
STRUBLE

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