PERUVIAN FOREIGN POLICY UNDER TOLEDO

C O N F I D E N T I A L SECTION 01 OF 03 LIMA 004377

SIPDIS

E.O. 12958: DECL: 10/08/2015
TAGS: PREL PE US
SUBJECT: PERUVIAN FOREIGN POLICY UNDER TOLEDO


Classified By: Political Counselor Alexander Margulies. Reason: 1.4(d
).


1. (C) SUMMARY: Under the Toledo Administration, Peru's
foreign policy has become more aligned with that of the
United States than it has probably been at any time since the
1968 Velasco coup. While Peru continues to advocate policies
that we disagree with, such as adherence to the International
Criminal Court and the Kyoto Protocol, or the adoption of
"innovative financial mechanisms," the Toledo Government
played a constructive role in international consideration of
our Iraq policy; sees eye-to-eye with us on the Global War on
Terrorism, including support for Colombia against the FARC;
walked away from Brazilian blandishments to form a common
front against us on trade; came through on IAEA Board
consideration of Iran; contributed troops to the Haiti PKO;
and has taken the lead in resisting Venezuelan President Hugo
Chavez's efforts to manipulate regional organizations and
extend state control over continental energy
production/distribution. Some of these policies are based on
fundamental national interests that are unlikely to shift
with the upcoming change in government, but there are forces
at work to peal Peru away from the U.S. that cloud this
outlook. END SUMMARY.


2. (U) General Juan Velasco, who ran Peru from 1968-75, was
the Chavez of his time -- a left-wing hyper-nationalist who
considered U.S. influence a threat to his domestic programs
and to national sovereignty. With the fall of Velasco,
things improved, but relations did not recover to their
pre-1968 level. The Armed Forces continued to favor the
Soviet Union as the supplier of equipment and training.
During successor governments, Peru maintained its strong
idenification with the Non-Aligned Movement and sought to
minimize U.S. access/influence, limiting foreign investment,
rejecting readmission of the Peace Corps, and refusing to
service the foreign debt. Bilateral relations were often
troubled by the fact that our values were not aligned. Our
human rights and democracy policies, particularly during the
latter years of the Fujimori regime, led to tensions not only
in the bilateral relationship, but in international
organizations where Peru made common cause with the wrong
crowd. Fujimori's refusal to vote in favor of the Cuban UN
Human Rights Commission resolution being a good example. At
other times, sharp economic differences, especially President
Alan Garcia's expropriations and renunciation of debt, soured
relations.

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What has changed?
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3. (U) Starting with Fujimori, the opening of foreign trade
and investment along with ATPA benefits increased our
influence with domestic constitutencies. Foreign trade has
been the most dynamic sector of the economy and responsible
for most economic growth. The importance of the U.S. market
has grown from 16 to 29 percent of Peruvian exports. We are
the largest purchaser of non-traditional exports like mangos,
asparagus and textiles/clothing, so our impact on job
creation has been even greater than those already impressive
figures indicate.


4. (U) President Toledo and much of his economic team have
lived and obtained an influential part of their education in
the U.S. They have a strong appreciation for the U.S., an
understanding of how the U.S. operates that many of their
predecessors lacked, and a realization of the benefits that
economic integration, through a free trade agreement and
increased U.S. investment, will bring to Peru.


5. (U) Consequently, under Toledo, Peru is largely aligned
with us on values related to economic growth/job
creation/poverty reduction. A significant change in this
administration is that the spread of U.S. influence is
largely viewed as positive. This is illustrated by the
invitation for Peace Corps to return, the broad high level
access we enjoy to officials, the fact that U.S. investment
is viewed by many within the government as being not only
welcome but better than that of other countries in terms of
the business values it brings. Moreover, for the first time
in many years we are lined up on democracy values, a shared
vision enhanced by the negative experience that President
Toledo and members of his administration had under the
authoritarian Fujimori regime. Peru's experience with
Sendero Luminoso and Tupac Amaru Revolutionary Movement
(MRTA) terrorism also lines up our values in that area --
tellingly in the case of Peru's strong cooperation with
Colombia.


6. (C) That is not to say that Peru and the U.S. are
perfectly aligned on foreign policy issues. The GOP
continues to advocate foreign policies that we disagree with,
such as adherence to the International Criminal Court and the
Kyoto Protocol, or the adoption of "innovative financial
mechanisms" to avoid IFI debt ceilings. Nonetheless, the
Toledo Government has often gone out on a limb to side with
us on issues of major importance:

-- it played a constructive role in the UNGA, the UNCHR and
the OAS on Iraq, making clear that it viewed Sadaam Hussein
as being responsible for the crisis there;

-- it sees eye-to-eye with us on the Global War on
Terrorism, supporting unconditional condemnation of terrorism
and terrorist organizations in international fora,
cooperating with us on counter-terrorism measures, and
providing strong support to Colombia against the FARC;

-- it came through on IAEA Board consideration of Iran's
violations of its nuclear non-proliferation obligations;
-- it contributed troops to the Haiti PKO and has offered to
increase its commitment when other countries in the region
are indicating that they may pull out; and

-- President Toledo has taken the lead in resisting
Venezuelan President Hugo Chavez's efforts to manipulate
regional organizations, such as the South American Community
of Nations, and is opposed to Chavez's initiatives to extend
state control over continental energy
production/distribution. Peru's mediation of the "Granda
Crisis" between Colombia and Venezuela ensured that
Colombia's concern with the GOV's practice of giving
safehaven to FARC figures was protested.

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Will it last through a change of Administration?
-------------- ---


7. (C) Peru's positive foreign policy tilt towards the U.S.
may last through a change of administration, but we will have
to work hard to preserve it. None of the major Presidential
candidates has Toledo's experience in/of the U.S. nor his
sensitivity to our point of view. What we have going in our
favor is:

-- That US-educated officials have in the past 15 years been
inducted into and moving up the ranks of government. Some
US-educated officials have, of course, been problematic (such
as Santiago Roca in Indecopi) but most reflect a new mindset
favorable to our interests.

-- Our growing commercial/investment ties, which have
created a powerful pro-U.S. constituency among the
entreprenuerial class.

-- The large Peruvian community in the U.S. and the view of
our country that it has communicated to the more modest
(B/C/D) classes.

-- That Civil Society is larger, healthier and more
influential than in the past. Non-governmental organizations
sometimes represent powerful opposition to our agenda
(Article 98 and in the case of some the FTA),but more often
than not they are lined up with us on democracy/human rights
values issues.

-- That more American tourists are coming here, there are
more Peace Corps volunteers and our binational centers are
crammed with students learning American English;
people-to-people interaction is greater than ever before.


8. (C) What we have to watch out for is:

-- The Foreign Ministry. The Foreign Affairs professionals
will ultimately do what the administration tells it, but most
of them have been trained in the Latin American leftist
tradition and hold ambiguous or worse views of the U.S.

-- The left. Efforts to create a "new left" movement along
the lines of what Lagos' socialists have done in Chile have
not taken off. The left remains defined as anti-business and
anti-US. There are folks striving to take the new approach,
but they haven't yet been able to make inroads against the
old thinkers.

-- The Brazilian alternative. We are in an undeclared
contest here with Brazil for influence. We are winning on
most issues that count (FTA, market economics, pro-foreign
investment),but the GOB is still very much in the game.
Neither China nor the EU have in practice pursued an increase
in their influence here as though it were a zero sum contest
with the U.S. Venezuela does, but hasn't made many in-roads
beyond the far-left. Brazil also does and in real terms is
the more serious player. This has been evident in the G-21
trade initiative, in the GOB's pushing of a foreign policy
coordination mechanism in the South American Community of
Nations process, and in the way the GOB outmanuevered us this
year on the Cuba UNCHR resolution, getting Peru to abstain
for the first time under Toledo.
STRUBLE