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Cablegate: President Apologizes for Slow Pace of Reform

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E.O. 12958: N/A
TAGS: PREL PGOV MARR ECON ETRD PHUM PE
SUBJECT: PRESIDENT APOLOGIZES FOR SLOW PACE OF REFORM


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1. (SBU) Summary: In his July 28 National Day address,
President Garcia apologized for the central government's
failure to move quickly to address social demands, which he
said had helped spark widespread protests. Garcia outlined
an ambitious agenda for his next four years, focusing on
poverty reduction, job creation, and infrastructure
investment. Emphasizing that the GOP had done everything
necessary to conclude the Peru Trade Promotion Act (PTPA),
the president said the treaty's fate now rested in the hands
of the U.S. Congress. Nationalists and labor leaders sharply
criticized the address, and the congressional opposition
faulted the president for failing to provide more details on
how the GOP will meet its goals. Still, Garcia's
conciliatory tone and focus on Peru's social needs placated
many critics and showed that administration has a clear
understanding of what needs to be done to further consolidate
democratic government. End Summary.

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The President's Address
-----------------------

2. (SBU) In a two-hour address to the nation on July 28, in
celebration of Peru National Day and on his one year
anniversary in office, President Alan Garcia acknowledged
that "profound problems and great social conflict" existed in
Peru. He apologized for the central government's slow pace
of reform, which he said had caused public frustrations to
boil over. He called on Peru's poor to suspend their anger
and to give the government a period of truce to deliver
results. Garcia insisted that administrative
decentralization was the key to improving public services,
and he said that 70 per cent of public funds were now
controlled by regional and municipal authorities. Garcia
also apologized to public school teachers for the harsh
rhetoric he had used during the national teacher's strike.

3. (SBU) Turning to the future, Garcia outlined an ambitious
reform agenda that he hopes to complete before 2011,
including lowering the poverty rate from 50 to 30 percent
nationwide and reducing the percentage of persons in extreme
poverty from 24 to 13 per cent. He also promised to create
1,500,000 new jobs during the next four years and to increase
the percentage of workers in the formal economy from 35 to 50
per cent. Garcia also said the central government would
invest $30 million on infrastructure, build 250,000 homes for
low-income families, and ensure that 90 per cent of Peruvians
had access to clean water.

4. (SBU) With respect to the PTPA, Garcia repeated publicly
what he has told USG officials privately: the GOP has done
everything necessary to ratify the accord and the ball is now
in the court of the U.S. Congress. Further delay, Garcia
said, would offend Peru's national dignity. (Note: Several
government ministers have since publicly echoed the
President's remarks on the FTA, calling on the U.S. Congress
to finish the deal. End Note.)

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The Reaction
------------

5. (SBU) Nationalist leader Ollanta Humala offered the
harshest criticism of the address, saying the Garcia
government had aggravated the political crisis in the
country. The Peruvian Medical Federation said that the
government had provided insufficient funding for public
health, a failing Garcia failed to acknowledge. In response,
the federation announced a national strike for August 15.
Peru's largest union, the Central Confederation of Peruvian
Workers, complained Garcia had neglected to mention the lack
of legal protections for workers in Peru and had failed to
ratify the General Labor Law. The teacher's union in Lima
accepted Garcia's apology, but regional union leaders said
they had no intention of ending protests.

6. (SBU) The regional presidents of Huancavelica, Puno, and
Lima said they had not received the transfer of funds Garcia
mentioned, and clarified that the lion's share of these funds
went to only three of Peru's 24 regions. They plan to meet
with other regional leaders to make a case before Congress
for more money. Edgardo Reymundo of the opposition Union for
Peru party said Peru's most serious problem is corruption, an
issue the president had ignored, and Carlos Bruce of the
Parliamentary Alliance faulted the president for failing to
detail how he would achieve the goals promised by 2011.
Several analysts noted that the speech was vintage Garcia,
long on ideas but lacking specifics regarding implementation.

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Comment:
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7. (SBU) Garcia can be one of Peru's most electrifying
speakers, but on National Day he favored substance over style
-- almost to a fault. His apologetic opening was welcomed by
many who have criticized the president for failing to admit
mistakes. Business groups were pleased by the president's
blunt message on the PTPA, and even the congressional
opposition acknowledged that progress has been made in
consolidating Peruvian democracy in the past year. Perhaps
most important of all, the president recognized the urgent
need to respond to the bread and butter grievances that have
brought Peruvians into the streets, and he provided a broad
brush agenda of what the government must do to address them.
End Comment.


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