PRESIDENT TOLEDO REALIGNS CABINET: POLS REPLACE

UNCLAS SECTION 01 OF 02 LIMA 001017

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: PGOV PREL PE ATPDEA
SUBJECT: PRESIDENT TOLEDO REALIGNS CABINET: POLS REPLACE
TECHNOCRATS

Sensitive But Unclassified, Please Handle Accordingly

--------------
Summary:
--------------

1. (U) President Toledo replaced four cabinet members on
2/26, bringing in new heads for the Ministries of Justice,
Agriculture, Labor and Production. The new faces raise the
profile of Toledo's Peru Possible party in the government --
two of the new ministers are strong party members and the
third has been a close personal advisor to Toledo. The
changes are widely seen as a move toward a less technocratic,
more political cabinet that will dedicate itself to raising
the President's approval numbers and Peru Possible's
prospects in the run-up to the next elections, through
programs like Toledo's recent proposal to pay a USD 30
subsidy to citizens under the GOP's poverty line. Brief
sketches of each of the new Ministers follow. End Summary.

--------------
Justice
--------------

2. (U) The incoming Justice Minister is Eduardo Salhuana. He
was elected to the Congress in 2001, where he served on the
Justice, Constitutional and Budget Commissions, and was also
a spokesman for the Peru Possible party. Previously, he was
dean of the Law School in Puerto Maldonado in the Madre de
Dios Region (eastern jungle). He has been a legal advisor to
various organizations in that region. Salhuana replaces
Carlos Gamarra.

--------------
Agriculture
--------------

3. (U) The new Agriculture Minister is Manuel Manrique. He
is a civil engineer who has studied at Northwestern
University. He was the Executive Director of a major
irrigation project for the Ministry of Agriculture. Manrique
is not seen as an expert in a wide range of agricultural
issues. Manrique replaces Alvaro Quijandria.


4. (SBU) According to an Embassy alternative development
contact, Manrique is a close associate of former Agriculture
Minister Jose Leon Rivera, who was forced to resign from the
cabinet in April when news broke that he was part-owner in a
hotel that hosted a brothel with underage prostitutes. Leon
was often at odds with Embassy interests because of his
attempts to cater to the cocaleros, and Manrique has already
announced his intention to "engage" with cocaleros. The same
contact advises that President Toledo treats Manrique like a
family member (although he is not),and that Manrique has a
close relationship with First Lady Eliane Karp.

--------------
Labor
--------------

5. (U) The new Minister of Labor is Juan Sheput. He is an
industrial engineer who taught at Frederico Villareal
University and who studied at the University of the Andes in
Colombia. During the Toledo administration, Sheput served as
a personal advisor to the President, and was also Head of the
Council of Advisors at the Interior Ministry. He has been a
frequent and helpful contact of the Embassy. Sheput replaces
Javier Neves Mujica.


6. (SBU) Neves Mujica was a technocrat who was perceived by
business as being too pro-labor, and recently had public
differences with Finance Minister Pablo Kuczynski over
proposals to make the labor market more flexible. Some
commentators have speculated that his departure could
contribute to greater labor union militance against the FTA.

--------------
Production
--------------

7. (U) The new Minister of Production is David Lemor, a civil
engineer, and a graduate of North Carolina State University,
who speaks fluent English. He is a textile producer and has
been the Vice President of National Industrial Society, a
pro-protectionist organization of textile manufacturers.
Lemor is the only member of the new group of ministers not
closely associated with Peru Possible. He replaces Alfonso
Velasquez.
Comment:

8. (SBU) The latest cabinet changes move President Toledo
away from the course many editorialists and opposition
members had urged him upon, i.e., to name credible
technocrats to his cabinet and let them govern. Also of note
is the absence of any figures from the Independent Moralizing
Front (FIM),Peru Possible's governing coalition ally, in the
Cabinet; however, Peru Possible leaders denied any change in
their alliance as a result of the naming of the new
ministers. It has been reported that Toledo consulted
closely with FIM leader Fernando Olivera before making the
last changes, and Olivera has predicted a second round of
cabinet changes around the middle of the year.
STRUBLE