SCENE SETTER FOR DEPUTY SECRETARY NEGROPONTE

UNCLAS LIMA 001591 SIPDIS SENSITIVE SIPDIS E.O. 12958: N/A TAGS: PGOV PREL ECON ETRD EFIN PE SUBJECT: SCENE SETTER FOR DEPUTY SECRETARY NEGROPONTE ¶1. (SBU) Your visit provides an excellent opportunity to build on the success of President Garcia's recent trip to Washington and to reaffirm our message that democratic government and openness to trade and investment, coupled with proactive policies to improve social justice, are the best means of reducing poverty and expanding social inclusion in Peru. ¶2. (SBU) President Garcia and Foreign Minister Garcia Belaunde are pleased that tangible progress was made in obtaining U.S. congressional approval of the Peru Trade Promotion Agreement (PTPA) during their April 24 to 25 visit to Washington. President Garcia has told us he is delighted with the policy-level dialogue he has with Washington; since his inauguration on July 28, 2006, he has twice visited the White House, and President Bush phoned him to consult before his trip to South America. In the past three months, Garcia has received Secretary Paulson, the Director of AID, the Deputy US Trade Representative, and Southcom Combatant Commander Stavridis. We have used high-level visits to emphasize different aspects of President Bush's opportunity agenda for Latin America, from free trade to access to capital for the poor. Because Peruvians sometimes see us as being more concerned about economic rather than social issues, we see great value in focusing our public diplomacy message during your visit on public education. The USG has three highly innovative programs to improve Peru's public education system to enable a broader sector of the population access to the full range of economic and social benefits. Educational reform is a top priority for the Garcia government and a subject of considerable public/press attention. ¶3. (SBU) Getting US Congressional approval of the PTPA is currently the government's highest foreign policy priority. Garcia has talked about the benefits and importance of the agreement at every meeting with USG officials. He considers the PTPA an essential component of his democratic, free-market vision of government, which he has contrasted to the autocratic "Bolivarian" populism espoused by President Hugo Chavez. Garcia remains convinced that insertion into the global economy is the best means to alleviate the poverty that afflicts nearly half of all Peruvians, and he has backed his words with policies favoring macro-economic stability and encouraging foreign investment. Peru's economy continues to surge: an average of five per cent growth between 2001-2005, seven per cent in 2006, and eight per cent projected in 2007. Fueled in part by high mineral prices, exports and per capita GDP figures have significantly increased over the past five years. The government has used this largess to begin efforts to direct the benefits of growth to the provinces and to the poor. ¶4. (SBU) Despite the macroeconomic success, deep-seated poverty remains a fundamental political challenge. Nearly half of all Peruvians, concentrated in the southern highlands and Amazonian lowlands, live below the poverty line. In the 2006 presidential elections, radical populist Ollanta Humala seized on widespread discontent in these areas to come within six percentage points of winning the presidency. Garcia knows that if his government is to succeed, economic growth and open markets must reduce poverty and extend material benefits to a majority of Peruvian citizens. ¶5. (SBU) A key part of the government's plans for reform is the GOP's efforts to rejuvenate a badly underperforming educational system. In February, the Garcia Administration won a highly publicized showdown with the radical public teacher's union SUTEP, when Minister of Education Jose Antonio Chang implemented mandatory teacher testing and announced the results: 50 percent of public school teachers could not perform simple math, and 30 percent were functionally illiterate. SUTEP issued a public apology for the results, and the government seized the initiative to announce plans to upgrade school facilities, buy new textbooks, and increase teacher training. A survey by the University of Lima in February showed 59 percent of those polled supported the GOP's efforts. ¶6. (SBU) Garcia's social policy consists of two inter-related planks. The first is to consolidate Peru's social support programs, reduce overhead costs, and ensure that public funds get directly into the hands of those who need them the most. The second is to significantly increase social spending, with a focus on education, clean water and electrification. Most analysts credit Garcia for the energy and vision he brings to conceptualizing plans for social reform, but implementation is often slowed by the administrative shortcomings of the central government and by municipal and regional governments ill-prepared to assume a greater role in managing social welfare programs. ¶7. (SBU) The themes struck by President Bush during his Latin America visit--strengthening democracy, investing in people, improving education and health, and expanding free trade--reflect the policy priorities of the Garcia administration. Your visit is a timely opportunity to underscore these convergences. We hope in particular to highlight three innovative but little known USG programs aimed at providing greater opportunity to the poor by improving public primary education. They are the Center for Excellence in Teacher Training (which was launched during President Bush's 2002 trip to Peru),Aprendes, and Preparate por la Vida. The Center for Excellence (CETT) trains primary school teachers to better impart reading, writing and math skills to their students. Aprendes combines teacher training with greater parental involvement in schools; it has had such striking results in the region where it operates that a Canadian mining company is spending 18 million dollars to expand it to another area of Peru. Preparate por la Vida is a new five million dollar, five year Department of Labor funded program to help working children return to school. ¶8. President Garcia has told me that he very much enjoyed your dinner conversation in Washington and looks forward to your visit. I join him in extending a heartfelt welcome. STRUBLE