THREE PRESIDENTS INAUGURATE INTEROCEANIC HIGHWAY

UNCLAS LIMA 003923 SIPDIS SENSITIVE DEPT FOR WHA/AND, WHA/EPSC, EB/TPP TREASURY FOR OASIA/INL COMMERCE FOR 4331/MAC/WH/MCAMERON E.O. 12958: N/A TAGS: KTEX ETRD ECON PGOV PREL PE SUBJECT: THREE PRESIDENTS INAUGURATE INTEROCEANIC HIGHWAY Ref: 04 Lima 5397 ¶1. (SBU) Summary. The Presidents of Peru, Bolivia and Brazil met in Madre de Dios, Peru on September 8, to inaugurate the $810 million Interoceanic Highway project, which will connect Brazil's Atlantic coast to Peru's Pacific coast. The governments expect the highway to be completed by 2010. President Toledo predicted that in addition to solidifying relations between Peru and Brazil, the highway would help improve Peru's trade by an estimated $1 billion annually and help link the poorer jungle and sierra areas to Peru's more prosperous coast. End Summary. Groundbreaking Ceremony -------------- ¶2. (U) In November 2004, President Toledo and Brazilian President Luiz Inacio Lula da Silva signed an agreement to establish an Atlantic-Pacific highway through the two countries (Reftel). President Toledo, President Lula and Bolivian President Eduardo Rodriguez convened in Puerto Maldonado, Peru (in Peru's southeast Amazon) on September 8 to inaugurate the Interoceanic highway project, making the dream a reality. The project, estimated at $810 million, is planned to connect Brazil's Atlantic coast with Peru's Pacific coast by 2010. According to President Lula, Brazil will finance $416 million, with the Andean Promotion Corporation funding the rest. ¶3. (U) A paved highway currently exists from Brazil's Atlantic coast to the border town of Assis, on the Brazilian side of the Rio Acre. The majority of work on the highway will occur in Peruvian territory, as the planned 682-mile road will extend through both jungle and mountainous areas before reaching the Pacific coast. According to ProInversion (the GOP agency that handles privatizations and concessions),the highway project will be divided into five sections. One Peruvian and two Brazilian companies have already obtained 25-year concessions for three sections. The GOP is expected to open concessions for the remaining two stretches of road in November. Expected Economic Gains -------------- ¶4. (U) During the ceremony, all three presidents highlighted the potential trade benefits of the highway. President Toledo commented that the finished highway would enable Peru to develop its ports of Marcona, Matarani and Ilo in the southern part of the country. With improved infrastructure connecting the jungle and sierra regions to the coast, President Toledo also predicted that Peru's trade should increase by $1 billion annually once the project is completed. Brazilian President Lula noted that Brazil would be able to more easily transport its products to Asia via Peruvian ports. The highway will also provide landlocked Bolivia with access to both the Atlantic and Pacific highways. Comment -------------- ¶5. (SBU) The Interoceanic Highway, once completed, will not only connect the Atlantic and Pacific coasts, but will also be instrumental in connecting the more remote jungle and sierra areas of Peru to the more prosperous coastal areas. We expect Peru to benefit not only from increased trade through the southern ports, but also in the border regions of Peru, Bolivia and Brazil. Additionally, the southern jungle and sierra regions, which are among some of the poorest areas in Peru, will benefit from improved infrastructure, as local products, such as fruits and lumber, can be shipped more easily to other areas in Peru while eco-tourists may find it easier to travel to these remote destinations. STRUBLE