SECRETARY GUTIERREZ MEETS PRESIDENT ALAN GARCIA

C O N F I D E N T I A L LIMA 003104

SIPDIS

SIPDIS

E.O. 12958: DECL: 08/07/2016
TAGS: PGOV PINR PHUM VE PE
SUBJECT: SECRETARY GUTIERREZ MEETS PRESIDENT ALAN GARCIA


Classified By: A/POL David C. Brooks, for Reasons 1.4 (c,d)


1. (U) President Alan Garcia met privately for 20 minutes
with Commerce Secretary Carlos Gutierrez following the
inauguration ceremony on July 28. The President was
accompanied by Foreign Minister Jose Antonio Garcia Belaunde.
Ambassador Struble joined the Secretary.


2. (C) Secretary Gutierrez congratulated President Garcia on
his inauguration and said that President Bush was glad Garcia
had accepted his invitation for an early visit to Washington.
The conversation quickly turned to a discussion of regional
affairs. Garcia noted that Mercosur would have a difficult
time absorbing new member Venezuela*an action whose only
justification is that Chavez has lots of money. Garcia noted
that Argentine President Kirchner had promised to attend his
inauguration but bowed out following the Cordoba Mercosur
meeting, noting wryly "Kirchner has gotten enough money out
of Chavez that he doesn't need anyone else."


3. (C) Garcia said that in his earlier bilaterals with Evo
Morales and Ecuador's Palacios, he tried to counsel them
against populist economic measures. Reiterating a theme he
alluded to in his inaugural speech, Garcia told them he could
easily raise one billion dollars in new revenue by compelling
renegotiation of contracts with mining and energy firms in
Peru, but in doing so he would put 24 billion dollars in
prospective investment at risk. He told the Bolivian and
Ecuadorian leaders that they needed to take the long view.
Garcia recalled for Palacios that he had persuaded Occidental
Petroleum to renegotiate its contracts in Peru during his
first government. You could get away with something like
that when Armand Hammer controlled the company, he told
Palacios, because the man's pride made him reluctant to let
go once he had started in a country. Occidental was now run
on strictly business lines, however, and would react
differently; Garcia urged Palacios to find a solution to the
dispute.


4. (C) Comment: President Garcia only granted bilaterals
to delegations headed by Chiefs of State with two exceptions
-- the United States and Japan. In both instances, he wished
to convey special regard for countries that are especially
important donors and trade partners. Garcia's "counseling"
of Ecuador and Bolivia reflect his government's concern that
those countries are teetering between alignment with
Venezuela or continued alignment with its Andean partners.
We expect the new government to show greater activism in
those two countries than the Toledo Administration.
STRUBLE