LIMA MAYOR CASTENEDA,S UNUSUAL AND SUCCESSFUL

C O N F I D E N T I A L LIMA 001229

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/29/2016
TAGS: PGOV PINR PE
SUBJECT: LIMA MAYOR CASTENEDA,S UNUSUAL AND SUCCESSFUL
APPROACH TO POLITICS

Classified By: Ambassador Curt Struble for Reason 1.4 (B/D...

id: 58639
date: 3/29/2006 19:41
refid: 06LIMA1229
origin: Embassy Lima
classification: CONFIDENTIAL
destination:
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DE RUEHPE #1229/01 0881941
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FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC PRIORITY 9475
INFO RUEHBO/AMEMBASSY BOGOTA PRIORITY 3170
RUEHBR/AMEMBASSY BRASILIA PRIORITY 6613
RUEHCV/AMEMBASSY CARACAS PRIORITY 9234
RUEHLP/AMEMBASSY LA PAZ MAR 3159
RUEHQT/AMEMBASSY QUITO PRIORITY 0169
RUEHSG/AMEMBASSY SANTIAGO PRIORITY 0342
RUEHGL/AMCONSUL GUAYAQUIL PRIORITY 4168
RHMFISS/CDR USSOUTHCOM MIAMI FL PRIORITY


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C O N F I D E N T I A L LIMA 001229

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/29/2016
TAGS: PGOV PINR PE
SUBJECT: LIMA MAYOR CASTENEDA,S UNUSUAL AND SUCCESSFUL
APPROACH TO POLITICS

Classified By: Ambassador Curt Struble for Reason 1.4 (B/D)



1. (C) SUMMARY: Lima Mayor Luis Casteneda has a unique
political style that has built him political support among
the lower middle class and poor. He eschews vocal populism,
letting his deeds speak for him, and approaches municipal
governance in a manner more common to business than the
public sector. Castaneda won the affection of Lima's poor
through public works (building nearly 1000 cement stairways
up to marginal suburban settlements, erecting clinics,
rehabilitating parks) and prioritizing transportation
projects that help the poor. Casteneda,s administration
charges user,s fees for most of these programs. This,
coupled with more efficient tax collection, has balanced
Lima's books after many years of deficits. Although he
bypassed the Presidential race this time, Castaneda is a
driven man who aspires to the top office. He expects to be
the rallying point for the opposition if ultra-nationalist
candidate Ollanta Humala wins the Presidency. END SUMMARY.


2. (SBU) On March 23 Lima Mayor Luis Casteneda Lossio invited
Chiefs of Mission accredited to Peru to join him for a six
hour tour of his public works initiatives. The fact that
nearly 30 of the 49 resident Ambassadors attended speaks to
Casteneda,s standing as Peru,s most popular political
leader. (He regularly polls approval ratings in the 70
percent range.) Casteneda has a unique political style.
Though a coalition ally of center-right Presidential
candidate Lourdes Flores, Casteneda has built his political
support at the opposite end of the social/economic spectrum
-- among the lower middle class and poor. He eschews the
populist formula that so often characterizes candidates who
pitch themselves to the poor; Casteneda seldom has much to
say to the public, letting his deeds speak rather than words.
He has approached municipal governance in a manner more
common to business than the public sector.


3. (U) Casteneda, who will seek reelection in November 2006,
has been in office for three years. He ran a
come-from-behind campaign based in Lima,s poor "conos" to
defeat Alberto Andrade, who looked unbeatable at the onset of
the 2002 race. Casteneda is a native of Chiclayo in northern
Peru where his father was a highly regarded mayor three
decades ago. He continues to have strong ties to the north
coast, where two of his Solidaridad Nacional Congressional
candidates won election in 2001. Casteneda,s political
success in Lima has been personal rather than institutional;
Lourdes Flores Popular Christian Party (PPC),rather than
Casteneda,s National Solidarity (SN) party, is still the
more important element in the capital of their Unidad
Nacional alliance.


4. (U) Castaneda won the affection of Lima's poor in 2002 by
building several hundred cement stairways up the sand dunes
where the capital,s squatters live without access to roads,
water, sewage or police services. Since his election,
Casteneda has pressed forward with the stairways, which he
calls "the expressways of the poor," bringing their
cumulative number to nearly 1000. The positive impact of
these routes, where thousands previously hauled water and
fuel up several hundred vertical feet of loose sand, is hard
to overstate. The stairways are almost the only public
works, however, for which Casteneda,s administration does
not charge a user,s fee. The mayor has:

-- built 14 "solidarity hospitals" in marginal neighborhoods
of Lima, converting shipping containers and retired buses
into examination rooms. These "hospitals" (they are actually
more like clinics) are all self-financing though the basic
charge for a non-specialized consultation is only USD 1.20.
The Ambassadors visited the first solidarity hospital, which
was opened just 5 months after Casteneda assumed office.
That facility is staffed by private doctors and sees an
average of 2500 patients per day. Casteneda noted that most
of the clientele could seek free treatment from the Social
Security hospital system, but find that the transportation
costs (not to mention lost time) in reaching those
centralized facilities are as much as the fee for the service
he provides.

-- expanded and rehabilitated several parks. The parks
charge a basic admission of US 50 cents per person and
additional fees for use of pools or other special facilities.
Most are built in C sector neighborhoods and offer the only
recreation around. As a result, they are well-used despite
the cost. Casteneda prides himself on the quality these
facilities, saying that he aims to give the poor something
that only members of private clubs previously could access.
The Ambassadors visited two such parks and saw that the boast
isn,t much of an overstatement.

-- given priority to transportation projects that help the
poor. By July 2006 the city will have completed the first
expressway (the Avenida Grau project) for the exclusive use
of public transportation. It will allow users of the city,s
electric train, which has been extended by Casteneda, to
reach center of Lima more quickly and cheaply. One year
later, the city expects to complete an underground bus
station at Plaza Grau that will for the first time connect
public transportation along expressways that run from the
city,s extreme north to its extreme south. The municipal
government is working with bus owners to establish fixed
routes and timetables so that commuters of modest means will
know when they can get service. (Buses presently operate in
a completely haphazard way.) By removing thousands of buses
from crowded city streets, Casteneda hopes to ease traffic
flow in Lima,s central district and attract new investment
there.


5. (U) Reversing more than a decade of persistent deficits in
the city budget, Casteneda has both balanced Lima,s books
and more than doubled its infrastructure expenditures. He
did this first by a relentless crackdown on property owners
who were either evading or badly in arrears on taxes. His
first large investments were in toll road expressways.
Having shown that the income stream on those projects more
than covered costs, Casteneda was able to earn a local AAA
rating for bond issues to reprofile high-interest debt and
build more projects.


6. (C) COMMENT: Casteneda has broken the political mold in
Peru. While now well regarded by Lima,s privileged (who
supported his opponent in 2002),his political base is among
the C/D/E sectors. Yet he does not approach these voters as
his competitors do -- he rarely gives speeches and is averse
to offering handouts. Though greater Lima holds more than
one-third of Peru,s voters, the mayor,s office has a lousy
record of launching even its popular incumbents into the
Presidency. Casteneda decided this time around to stay out
of the national race, reportedly because of a health problem
(a painful bum leg) and because too many of his public works
projects were still just holes in the ground. He is a driven
man, though, who certainly aspires for the top office. In
the meantime, he told the Ambassador that he expects to be
the rallying point for the opposition if Humala wins the
Presidency. His credibility among the classes that also form
Humala,s political base will favor him in that role, but a
hostile national administration can also dull Casteneda,s
record. While Unidad Nacional has wavered between loyal and
fierce opposition to Toledo, Casteneda has had a good
relationship with the President, who has provided a lot of
financial backing to the mayor,s grander public
transportation projects. END COMMENT.
STRUBLE

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