AMBASSADOR MEETS PRESIDENT-ELECT GARCIA

C O N F I D E N T I A L LIMA 002853 SIPDIS SIPDIS E.O. 12958: DECL: 07/18/2016 TAGS: PGOV PINRPE PRELS PE SUBJECT: AMBASSADOR MEETS PRESIDENT-ELECT GARCIA Classified By: Ambassador J. Curtis Struble, Reasons 1.4 (b,d) -------------- Introduction and Summary: -------------- ¶1. (C) Ambassador Struble called upon President-elect Alan Garcia on July 14. The Ambassador was accompanied by DCM Phyllis Powers; Garcia was joined by his Foreign Minister-designate, Jose Antonio Garcia Belaunde. While the Ambassador and Garcia had maintained contact through intermediaries, they had avoided meeting during the election campaign and Peru's TPA ratification process to frustrate opposition candidate Ollanta Humala's efforts to paint Garcia as the USG's stalking horse. The Ambassador requested that the President-elect oppose Venezuela's UNSC candidacy, and sought clarification of Garcia's statements about renegotiation of the Peru TPA and whether he welcomes U.S. military assistance. Garcia said he did not see how Peru could vote to put Venezuela on the Security Council (which is encouraging but will require follow-up). He said that he made reference to possible future renegotiation of PTPA to calm fears but has no plans to request changes. He also expressed appreciation for USG military and police training, intelligence and equipment, saying his statement that he did not want US military assistance answered a question as to whether he would permit U.S. forces to directly fight terrorists and narcotics traffickers within Peru. When the Ambassador advised Garcia that two members of his Civil Aviation transition team might be tied to narcotics, the President-elect ordered their immediate dismissal. Garcia told the Ambassador that USG expressions of confidence in his government's ability to manage responsibly Peru's economy would be very helpful. End Summary. -------------- Venezuelan UNSC Candidacy -------------- ¶2. (C) The Ambassador noted that Peru would face a decision early in Garcia's tenure about what Latin American country to support for a seat on the UN Security Council; Venezuela is pushing its candidacy hard. The Ambassador pointed to UNSC efforts to prevent Iranian and North Korean acquisition of nuclear weapons. The fact that Chavez had announced visits to those countries at a time when responsible members of the international community were trying to pressure them to give up destabilizing programs underlined how harmful Venezuela's presence would be on the Security Council. Garcia asked his Foreign Minister-designate how he saw the state of play. Garcia Belaunde explained that Guatemala is competing with Venezuela. Were there a Latin American consensus, other regions would fall in line, but no consensus exists. A case could be made that it was Central America's turn, but it looked like Venezuela would be hard to beat. Mercosur is pushing Venezuela's candidacy; Caricom has fallen under the influence of Chavez's money; and Chile is trying to find a consensus alternative but not having any luck. Alan Garcia responded, "I don't see how we can vote for Venezuela." (Ambassador's Comment: After Chavez's string of insults against Garcia and his financial support for Humala, it seems far fetched that Peru could entertain a vote for Venezuela. All the same, I don't dismiss that possibility. When I sought a commitment last month from Garcia Belaunde that Peru would not support Venezuela, he became evasive. The Foreign Minister-designate comes from several years of working in the Andean Community and gives priority to achieving South American consensus. I can envision him falling into line with Brazil on this, or trading the UNSC vote for some ephemeral promise by Chavez to behave himself in Peru, which is why I wanted to go over his head. The President-elect's comment is encouraging, but we'll have to follow up to ensure that it locks in.) -------------- Peru Trade Promotion Agreement -------------- ¶3. (C) The Ambassador said that he felt he knew Garcia's position on the US-Peru Trade Promotion Agreement, but wanted to be able authoritatively to explain Garcia's remarks about possible renegotiation of the agreement to Washington. Garcia said that PTPA divides his base. His polls show that the public is split 50/50 on the issue, with higher levels of support in Lima and lower levels in the provinces. In the coastal north, which is Garcia's core base, there is more fear than opposition, particularly among cotton farmers. For that reason, Garcia said, he has welcomed the agreement while avoiding a 100 percent endorsement of the way that Toledo negotiated it. In practical terms APRA has already paid the political cost of endorsing the FTA, he said, through its unanimous vote for the agreement in the Congress. To assuage fears, Garcia says, he has pointed to the provision of the agreement that permits renegotiation, saying that if it turns out to Peru's disadvantage the country could seek adjustments down the road. However, Garcia said, he had no plans to request renegotiation. The Ambassador noted that raising the prospect of renegotiation complicates approval in the United States Congress by giving undecided members a reason to delay consideration. ¶4. (C) Garcia said that he hopes to quell fears and demystify free trade agreements by negotiating them with a series of countries ) specifying the European Union, Chile and Canada. Peru needs to open itself to international trade, he said. ¶5. (C) Garcia requested the Ambassador's appraisal of President Toledo's visit to Washington, asking whether the FTA would pass the US Congress in July. The Ambassador said that prospects are uncertain; Toledo had built good relations with members of the US Congress during his term, but it is a difficult political moment in the U.S. for a trade vote. -------------- Narcotics Cooperation -------------- ¶6. (C) The Ambassador next asked Garcia about a statement he made in an interview with Colombia's "El Espectador" to the effect that he did not want U.S. military assistance in the fight against terrorism or narcotics. Again, the Ambassador said, he thought he knew Garcia's position on the matter but wanted to have an authoritative version. The President-elect said that he viewed U.S. intelligence cooperation and material assistance as very important and very welcome. The implication of the Colombian journalist's question was whether Garcia would allow deployment of US troops in Peru for direct action in fighting terrorists or drug traffickers. "If I didn't say no to that," Garcia said, "I'd be thrown out of office." Garcia added that he perceived a loss of interest in the United States in Peru's fight against narcotics and an imbalance between the assistance to Colombia and Peru. For that reason he had publicly called for greater international assistance and for a Cartegena II conference. The Ambassador gave the President-elect a chart showing that U.S. assistance both for alternative development and police capacity building had doubled in the past five years compared to the 1990s. That said, the Ambassador acknowledged, the large U.S. budget deficit and our assistance responsibilities in Afghanistan and Iraq were putting pressure on the Andean programs. The Ambassador noted that analysis of cocaine samples seized in the U.S. showed that around 90 percent comes from Colombia, 10 percent from Peru and less than 1 percent from Bolivia. While much of Peruvian and Bolivian cocaine appears to be flowing to Brazil, Argentina and Western Europe, the U.S. is bearing most of the financial burden to fight it. He encouraged the President-elect to press for broader international participation in efforts to fight drugs. -------------- Possible Bad Apples in a Transition Team -------------- ¶7. (C) The Ambassador said that he wanted to alert the President-elect that, according to information available to the USG, two members of his Civil Aviation transition team had been involved in narcotics Kingpin Fernando Zevallos' cocaine business -* Miguel Ciriani and Hector Arce. Garcia said that he had appointed transition team leaders who were allowed in turn to name other members. The President-elect called Congressman Javier Velasquez Quesquen (the head of the team that covers Civil Aviation) on the spot to direct that the two men the Ambassador had named be separated immediately. -------------- Economic Confidence Shock -------------- ¶8. (C) The Ambassador closed the meeting by asking if there was anything he could do to help the President-elect. Garcia responded that USG statements that it expects Peru under his administration to enjoy macroeconomic stability and solid economic growth would be very useful. (Comment: Our meetings with the Economic transition team lead us to believe that Garcia will continue the Toledo administration's macroeconomic and investment-friendly policies. Garcia knows, however, that his 1985-1990 record on economic mismanagement makes tenuous the current confidence his administration enjoys among the business community.) STRUBLE