AMBASSADOR DISCUSSES HUMAL, DEVELOPMENT ISSUES IN

UNCLAS SECTION 01 OF 02 LIMA 005487

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR WHA/AND

E.O. 12958: N/A
TAGS: ECON PGOV PREL PE
SUBJECT: AMBASSADOR DISCUSSES HUMAL, DEVELOPMENT ISSUES IN
AREQUIPA

REF: LIMA 4661


1. (SBU) Summary. On the fringes of the Third Annual
Regional Agricultural Conference in Arequipa, November 27-28,
the Ambassador met with local dignitaries to discuss a
variety of issues, including regional development, the visit
of presidential candidate Ollanta Humala to Arequipa, the
recent regionalization vote and APRA party politics. During
the course of the meetings, local officials emphasized the
lack of regional support for Humala but noted that he was
succeeding in polarizing the country's political scene. End
Summary.

Development Issues
--------------


2. (U) Arequipa, a prosperous agricultural area located in
Peru's Southern highlands, is one of the most developed areas
in Peru, with 8.5 percent economic growth this year. Both
the Regional President and the Mayor lamented that one of
Arequipa's most pressing problems is lack of potable water.
Arequipa, like most of Peru, suffers from regular droughts.
According to Regional President Daniel Ballon, more than
400,000 people in the Arequipa Department )- approximately
one-third of the population )- lack access to potable water.
Limited water supplies can often have a crippling effect on
the local economy, he noted, as farmers may be unable to
produce for profit.


3. (U) Mayor Yamel Romero explained that Arequipa could
improve its water supply by building several dams and
developing technology to improve the efficiency of water use.
Cerro Verde Mine, a Phelps Dodge company and one of the
largest firms in Arequipa, is currently working with the
regional government to build two new dams in the region.
These dams will not only improve the region's water
collection capabilities but will also be used to feed
irrigation systems.


4. (SBU) Regional President Ballon, who previously worked at
Cerro Verde as an engineer and prides himself on his good
relations with the mine, highlighted that Cerro Verde has
contributed to the development of the surrounding area. In
addition to the dam project, Cerro Verde recently partially
funded a cancer research hospital in the city. The further
expansion of Cerro Verde operations will also benefit the
region economically, as the mine should seek to employ
several hundred new workers. Regional President Ballon noted
he is committed to working with Cerro Verde to further
improve the mine's relations with the region.


5. (U) Both Ballon and Romero emphasized the need to
diversify Arequipa's economy by improving tourism links
between Arequipa and the rest of Peru. The Ambassador
pointed out that cities in northern Peru, such as Cajamarca,
Piura and Chiclayo, are developing a tourism circuit that
could be a model for Arequipa. Ballon agreed, remarking that
the government has participated in several international
tourism trade shows in an effort to attract foreign tourists.
Both the regional and local governments plan to further
improve the region's already sound infrastructure. Regional
President Ballon said that his government, with assistance
from the Japanese, is in the process of paving new roads to
connect tourist areas.

Discussing Ollanta Humala
--------------


6. (SBU) Ollanta Humala, the ultra-nationalist Presidential
candidate, visited Arequipa for several days prior to the
Ambassador's visit to the region. During his meetings, the
Ambassador seized the opportunity to inquire about Humala's
recent campaigning and perceived support in Arequipa. Both
the Regional President and Mayor asserted that Humala has
very little support in the region. Regional President Ballon
pointed out that Humala attracted less than 3,000 supporters
at his rallies on November 26. Ballon opined that many of
the attendees were merely curious about Humala and his ideas,
rather than supporters of his presidential bid.


7. (SBU) Mayor Romero noted that Humala might succeed in the
long run at capturing the votes of the poor and
disenfranchised but underscored his doubts. While Humala has
yet to establish a political platform, the Mayor commented
that Humala has succeeded in polarizing the country, as the
other presidential candidates have begun to focus less on
their political agendas and more on his candidacy, shifting
the emphasis away from the true political picture. Romero
also felt that Humala committed a serious tactical error by
allying himself in Arequipa with the Caceres Velasquez
family, discredited former Fujimorista political bosses.
(Note: Despite the contrary views of the two APRA leaders,
polls consistently show the Southern Sierra area that
includes Arequipa is Humala's strongest base. End Note.)
APRA Politics and the Macroregion
--------------


8. (SBU) APRA dominates both the municipal and regional
governments in Arequipa but local party leaders do not have
harmonious relations. The Regional President campaigned
against the formation of a macroregion prior to the October
referendum on that issue (which was consistent with APRA's
nationwide position). Arequipa 's mayor, however, broke with
party orthodoxy to campaign in favor of a "yes" vote.
Arequipa was the only province in Peru in which a majority
voted for formation of a macroregion, suggesting that the
mayor's influence is unusually strong. A number of local
business leaders dismissed that interpretation in
conversations with the Ambassador, claiming that it was their
efforts that carried the day for yes votes. Be that as it
may, there is no question but that mayor Yamel Romero is a
maverick within APRA. Just prior to the Ambassador's visit,
Romero publicly called upon party leader Alan Garcia to step
down if he does not win election as President in 2006. While
Romero downplayed this statement to the Ambassador, he
admitted his frustration with the party, noting that many of
its younger members have a vision of the future that differs
from the current leadership. It was equally clear that Romero
and Ballon (and apparently their staffs) do not talk to one
another. The mayor requested that the Ambassador help
Arequipa establish contacts with organizers of foreign
tourism fairs and was surprised to learn that the regional
government had already launched a serious effort to market
Arequipa as a destination with foreign tour package operators.
STRUBLE