WHA/AND DIRECTOR'S MEETINGS ON BILATERAL

C O N F I D E N T I A L SECTION 01 OF 04 LIMA 004569

SIPDIS

DEPARTMENT PLEASE PASS TO USTR

E.O. 12958: DECL: 10/20/2015
TAGS: PREL SNAR ETRD PHUM PTER PE
SUBJECT: WHA/AND DIRECTOR'S MEETINGS ON BILATERAL
RELATIONS, TRADE, NARCOTICS, AND HUMAN RIGHTS


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

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SUMMARY
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1. (C) In meetings with Foreign Ministry, congressional,
economic, trade, counternarcotics, and human rights
officials/activists on 10/17-18, visiting WHA/AND Director
Philip French received a briefing on Peruvian views on
bilateral relations (termed excellent, with a plug for a
Toledo-POTUS meeting),Free Trade Agreement negotiations
(Peru wants to sign ASAP, but pleads for more give/less take
on agriculture),combating drugs (Peruvian officials want
more funding),the human rights situation (the activists
characterized the GOP's sins as those of omission, not
commission),Venezuelan President Hugo Chavez (termed more an
annoyance than a real threat),and domestic politics in an
election year. French also toured the new USAID-supported
Commercial Courts. END SUMMARY.

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THE PARTICIPANTS
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2. (U) During a hectic two days of meetings/lunches in Lima
on 10/17-18, WHA/AND Director Philip French met with:

-- leading presidential contenders Alan Garcia and Lourdes
Flores (Septel);

-- Foreign Ministry officials: Under Secretary for the
Americas Pablo Portugal, Director of North American Affairs
Nestor Popolizio, Director of Narcotics Affairs Dora Salazar,
Director of Economic Affairs Gonzalo Gutierrez, and Deputy
Director of Defense and Security Affairs Carlos Yrigoyen;

-- anti-narcotics officials: National Drug Agency (DEVIDA)
Senior Advisor Alfredo Barreto, DEVIDA officer Jorge
Valencia, National Police Anti-Narcotics Directorate
(DIRANDRO) commander Gen. Carlos Olivo, Interior Ministry
Executive Office of Drug Control (OFECOD) Director Gen. Jorge
Alvarez, and anti-drug NGO CEDRO Director Alejandro
Vassilaqui;

-- economic/trade officials: Minister of Production David
Lemor, Vice Minister of Agriculture Julio Escudero, FTA
Agriculture negotiator Julio Paz, and Trade Ministry
(MINCETUR) FTA coordinator Eduardo Ferreyros.

-- Congressmen Antero Flores-Araoz (Unidad Nacional) and
Luis Iberico (Independent Moralizing Front - FIM);

-- human rights activists: Alejandro Silva of the Human
Rights Coordinator (an umbrella organization for human rights
NGOs),Ivonne Macassi of IDEPUEP (the Catholic University's
human rights division),and Jorge Ramirez, Director of the
Afro-Peruvian Association; and

-- Commercial Court judges.

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BILATERAL RELATIONS
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3. (C) The Foreign Ministry officials highlighted the
"excellent" state of bilateral relations, pointing to
advances in counternarcotics and counterterrorism cooperation
through the CNIES agreement and ongoing coca eradication that
should surpass the hectarage goals for the year. U/S
Portugal noted that Peru will assume a seat on the UN
Security Council for 2006-2007, and looks forward to
cooperating with the U.S. on terrorism and other security
issues. He also repeatedly urged a positive response to
President Alejandro Toledo's request to meet with President
Bush, indicating that Toledo would like to raise the FTA
negotiations from the technical to the "political level."


4. (C) WHA/AND French stressed that Latin America remains a
priority for President Bush, who has instructed the State
Department to focus on strengthening democratic institutions
and promote economic growth/poverty reduction in the
hemisphere. He noted that the U.S. views Peru as a partner
in these efforts, as well as in combating populism and
ensuring regional security in the Andes. The Foreign
Ministry officials agreed with this assessment, citing it in
support for their argument that Peru's large rural population
(1/3 of the total) makes FTA agricultural issues into
social/political stability issues as well, and thus there
should be more give/less take on agricultural matters from
U.S. negotiators. They added that it was important for
regional stability that the U.S. keep the door open for
Ecuador and Bolivia to join the U.S.-Andean FTA.

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THE FREE TRADE AGREEMENT
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5. (C) The economic/trade officials urged for a rapid
conclusion to the FTA negotiations. Production Minister
Lemor emphasized that Peru is ready to wrap up talks on the
most difficult issue, agriculture, and would like to
negotiate with AUSTR Al Johnson's replacement to close that
chapter by next month. MINCETUR FTA Coordinator Ferreyros
said that Peru and Colombia are working well together, but
that Ecuador is slowing the two down on Intellectual Property
issues, notably data protection. He did not/not expect,
however, that Ecuador's position would prove a hindrance to
Peru and Colombia moving forward.



6. (C) Regarding timing for an FTA vote in Peru's Congress,
Lemor indicated that the GOP has three options:

-- seek a vote before the April 2006 general elections;
-- present the agreement after the elections, but before the
next government takes office on 7/28/05; or
-- leave it to the next Government,

indicating that he favored the second option. Congressmen
Flores-Araoz and Iberico, in their meeting with WHA/AND
French, stated that submitting the FTA to Congress in
late-May/early June, after the second round of presidential
elections, would be optimal to ensure that the FTA avoids
being caught up in the electoral turmoil.


7. (C) The Peruvian economic/trade team were concerned
about declining public support for the FTA, down from over 70
percent earlier this year to 51 percent in the most recent
poll. MINCETUR's Ferreyros stated that his ministry has
hired an outside consultant (noted journalist Cesar Campos)
to help promote the accord and refute the scare-tactic
arguments of FTA opponents. He explained that the campaign
will consist largely of radio and TV spots, primarily outside
of Lima. Production Minister Lemor added that private sector
associations are also organizing a pro-FTA publicity
campaign. He warned that Peru's Congress will be subject to
the winds of public opinion as the election season
progresses.

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COUNTERNARCOTICS ISSUES
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8. (C) Foreign Ministry and counternarcotics officials both
repeatedly pleaded for more money, decrying the planned
reduction in USG CN funding for Peru, particularly as CN
funding will remain steady for Colombia. WHA/AND French
explained that the budget situation was unlikely to improve,
given competing CN demands from Iraq and Afghanistan, as well
as Hurricane Katrina relief, and that both the Peruvians and
the USG need to explore ways to use existing resources more
efficiently. Items of note raised by the anti-narcotics
officials during the discussions included:

-- new DIRANDRO commander Gen. Olivo acknowledging the lack
of inter-agency coordination, as he noted that this was the
first time he had met with DEVIDA (the agency responsible for
intra-governmental coordination) since taking office two
months ago;

-- Gen. Olivo's admission that he has no/no funding to
implement the new precursor chemical law;

-- traditional use of coca is an untouchable issue, with one
million dedicated and three million occasional users;
-- cocaine use is increasing (polls indicate eight percent
of the population have tried cocaine or PCB at least once);

-- coca leaf production per hectare is increasing, from 1.2
tons to up to three tons per hectare; and

-- the radicalization of cocalero movements requires a
larger police presence to protect eradicators.

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HUMAN RIGHTS
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9. (C) The human rights activists praised the Toledo
Administration for its positive approach to human rights, but
faulted the Government for failing to implement the
recommendations of the Truth and Reconciliation Commission,
to resolve the problems of prison overcrowding, to
successfully prosecute military and police officials accused
of committing human rights offenses, or to come up with a
formula that ensures that local communities' interests and
participation are included in the design and implementation
of mining projects. They agreed that the GOP's sins were
primarily those of omission, not commission. Silva and
Macassi criticized what they say as insufficient political
will to confront seriously the country's human rights
problems, but Ramirez gave a spirited defense of the Toledo
Government's improvements in human rights legislation.

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HUGO CHAVEZ
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10. (C) In his meeting with Foreign Ministry officials,
WHA/AND French raised the issue of Venezuelan President Hugo
Chavez' regional destabilization efforts, asking whether the
GOP believed Chavez was attempting to extend his Bolivarian
Revolution to Peru? The Peruvians vehemently rejected this
possibility, claiming that Chavez believes that the
hemisphere is divided into separate axis, and that Peru and
Colombia are part of the "Monroevian Axis." They
acknowledged Chavez's support for destabilizing elements in
Peru, Ecuador and especially Bolivia, but opined that in the
case of Peru his interference was more an annoyance than a
threat. Engagement, they argued, was the proper tactic to
take with Chavez, not isolation. WHA/AND French agreed with
this assessment, explaining that while the USG's policy was
to engage with the GOV, it could not ignore Chavez's
continued anti-U.S. comments or his interference in the
internal affairs of other countries.

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DOMESTIC POLITICS
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11. (C) Congressmen Flores-Araoz and Iberico were upbeat
about domestic political stability, although they observed
that in an election year there were only limited
opportunities for legislative action. Flores-Araoz, who
heads the Constitutional Affairs Committee (and served as
Congress President in 2004-2005) said that the current
Congress should pass legislation aimed at creating a
professional civil service, along with some last minute
electoral code reforms, "and nothing else." Iberico, who
heads the Defense Committee, indicated that he is in no/no
hurry to pass a draft coca law in an election year, and will
be holding extended hearings on the bill. They were both
highly critical of attempts by the Constitutional Tribunal to
extend its jurisdiction to appeals from National Electoral
Board (JNE) decisions (the Constitution itself states that
JNE decisions are final) and of anti-system NGOs that receive
funding from the U.S. and other democracies.

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COMMERCIAL COURTS
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12. (U) Commercial Court Chief Judge Julio Wong provided a
tour of the new Commercial Courts facilities, highlighted by
interviews with commercial judges and a demonstration of the
Court's webpage, which will incorporate all rulings, thereby
maximizing transparency and creating a record of
jurisprudence that will serve as legal precedent. The
Commercial Courts began functioning in April 2005, supported
by USD 2.4 million in USAID technical, training and equipment
assistance. There currently are 15 commercial judges (five
more are planned). Since commencing operations, the
commercial judges have reduced the processing time for
handling a case at the trial level from two years to 2-3
months, with the appellate process reduced from an addition
1-2 years to 2-3 months. According to Wong, litigants have a
higher acceptance rate of the Commercial Courts' decisions,
with only about 10 percent of cases appealed to the next
highest level, whereas in other civil cases some 80 percent
of decisions are appealed. The banking sector is
particularly pleased with the Courts' operations, he added,
with banks offering to pay higher court fees in order to
assure the sustainability of the system. Furthermore, Wong
concluded, the Judicial Branch leadership strongly supports
the Commercial Courts, holding them forth as an example that
judicial reform can succeed in Peru during its current
lobbying efforts in Congress to secure a higher budget
allocation.

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COMMENT
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13. (C) WHA/AND French's visit was very useful in providing
Peruvian government officials with a Washington perspective
on the FTA negotiations and limiting factors on future
counternarcotics funding. Our interlocutors, in turn,
provided a bird's-eye view of the GOP's priorities and
prospects as the Toledo regime winds down and election
campaigning heats up. END COMMENT.
STRUBLE