IMF'S VIEW ON PERUVIAN PRESIDENTIAL CANDIDATES

C O N F I D E N T I A L LIMA 001284

SIPDIS

SIPDIS

DEPT FOR WHA/AND, WHA/EPSC, EB/IFD
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E.O. 12958: DECL: 04/04/2016
TAGS: PGOV EFIN EINV ETRD PE
SUBJECT: IMF'S VIEW ON PERUVIAN PRESIDENTIAL CANDIDATES

REF: A. LIMA 1197


B. LIMA 1064

Classified By: Ambassador J. Curtis Struble for reasons 1.4 (b) and (d)
.


1. (U) Transmission delayed due to techical problems.


2. (C) Summary. A team from the International Monetary
Fund's (IMF) Western Hemisphere division met with officials
from the five leading presidential campaigns in March. The
IMF team spent a minimum of two hours with each group,
listening to the various campaign proposals. Gilbert
Terrier, IMF team leader, observed that Lourdes Flores Nano's
campaign focuses on a disappointing unclear message, while
Humala's economic policies on nationalization are inherently
contradictory. The team remains concerned about an APRA
government, despite APRA pledges to support a free trade
agreement. During the meetings, the IMF team promoted
several common-sense economic ideas, although it is unclear
whether these ideas resonated with the campaign groups. End
Summary.

Flores, Paniagua Deliver Similar Messages
--------------


3. (C) Gilbert Terrier of the IMF's Western Hemisphere
division provided the Ambassador a readout of the IMF's
meetings with the five leading presidential campaigns on
March 6. Terrier noted his disappointing sense that the
Flores campaign is unable to convey a clear message. He
characterized her team as, "not strong." Flores' economic
advisors spoke mostly of improving the quality of public
spending -- something Terrier characterized as a "non-program
program." Terrier observed that Lourdes is perceived as
having clean hands and suggested that she would enhance her
prospects by putting more emphasis on "public good" ideas
during the campaign. The public perceives market-based
economics as dog-eat-dog, he said, and needs to be reassured
that the model can protect them and enhance their well-being.
The IMF team shared these observations with Prime Minister
Kuczynski.


4. (C) Terrier found Paniagua's people to be more thoughtful
and impressive, though with many of the same ideas as
Lourdes. Noting Paniagua's low poll numbers and the fact
that he is splitting off a part of the electorate that would
otherwise likely go to Flores, Terrier asked the Ambassador
whether there was any prospect that Paniagua might withdraw.
The Ambassador said that he saw no likelihood of that, as it
would badly hurt the prospects of Paniagua's Centrist Front's
Congressional ticket.

Humala's Contradictory Economic Policies
--------------


5. (C) The IMF also met with the Humala team, led by First
Vice Presidential candidate Gonzalo Garcia. Terrier said
that Garcia tried to put a positive spin on Humala's economic
program but he was, "very garbled," especially when the IMF
team pressed for greater clarity of apparent contradictions.
An example of this was when the team tried to draw Garcia out
on his candidate's views on nationalization. Garcia argued
that Humala was not seeking to nationalize industries, but to
renegotiate the terms of concessions and contracts to better
benefit the Peruvian people. When pressed, however, Garcia
lacked clarity in responding to questions about what Humala
would do if the companies refused to renegotiate or what
their incentives and disincentives would be.


6. (C) Terrier said that he had a hard time getting a feel
for how much of the Humala economic platform is rhetorical
(i.e. used to capture votes but not intended to be
implemented). He did not feel that he had a clear fix on the
candidate's position on expropriations. The Humala folks
clearly do not support the FTA, he said, but he wondered
whether the candidate's call for a referendum on the
agreement might offer him a way out should he come to office.



7. (C) Terrier noted that at one point in their
conversation, Gonzalo Garcia made a passing comment about,
"if Humala does not make it into the second round." He
quickly caught himself, however, and thereafter expressed
solid confidence that Humala will be one of the two. Garcia
insisted that there is nothing in the candidate's military
record that could embarrass him. For all that, Terrier
thought that there is at least some level of thinking in the
Humala campaign about contingencies that have Flores and Alan
Garcia in the runoff.

APRA to Support FTA
--------------


8. (C) Terrier found the APRA team of Economic Advisor
Enrique Cornejo and Congressman Jorge Del Castillo well
prepared in contrast to the impression left by an APRA
delegation that visited Washington three months ago. The
APRA team said that they would support the FTA and work
closely with the fund. Terrier remains concerned all the
same about follow-up and quality of implementation of a
possible APRA government.

Fujimoristas on Other Campaigns
--------------


9. (C) The IMF team also met with Santiago Fujimori and a
couple of others from the Fujimorista Alliance for the Future
Party. What Terrier found most interesting was Santiago's
take on other candidates -- he noted that there is a lot of
emotion that courses through Humala's campaign events while
this is not the case for Flores' campaign "meetings." Her
crowds look to Santiago like they have been paid to show up.

Comment
--------------


10. (C) The IMF's disappointment in Flores's campaign and
imprecise message may reflect the current downward trend in
her support throughout Peru, roughly a one percent drop per
week. It appears that the Unidad Nacional camp did take into
account some of the IMF's suggestions -- in mid-March,
Lourdes announced her ten campaign promises, which
encompassed "public good" ideas. These promises, however,
have not resonated with the Peruvian public.
STRUBLE