SCENESETTER FOR PM DAS COULTER-LED JUNE 26-27

C O N F I D E N T I A L LIMA 002181

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: DECL: 06/21/2017
TAGS: PREL KMARR PGOV SNAR PE
SUBJECT: SCENESETTER FOR PM DAS COULTER-LED JUNE 26-27
POL-MIL TALKS

REF: A. LIMA 994

B. LIMA 513

C. LIMA 3259 (06)

Classified By: Ambassador J. Curtis Struble for Reasons 1.4 (c and d)


1. (SBU) Your visit to Peru to lead the first-ever
Political-Military talks between Peru and the United States
comes at a time when relations between Lima and Washington
are in excellent shape. Since assuming office in July 2006,
President Garcia has maintained the solid macroeconomic
fundamentals laid down by his predecessor. This has kept the
country on an arc of sustained economic growth -- 8 percent
in 2006 and 7.5 percent annually for the first quarter of

2007. Garcia's challenge is to convert this economic growth
into significant poverty reduction. The ratification of the
U.S.-Peru Trade promotion Agreement (PTPA) by our Congress is
a vital foundation for a strategy of poverty reduction
through economic growth. For that reason, the President has
made good relations with the U.S. a top priority.


2. (C) In its foreign policy, Peru sees itself as part of a
moderate bloc of Pacific coast nations (Chile, Colombia,
Mexico) that can provide a quiet counterbalance to Venezuelan
President Hugo Chavez' radicalism. Garcia feels that the
best way to blunt the appeal of the Chavez model is not by
confrontation or rhetoric but by proving that market based
policies deliver more benefits to the people than does
populism.


3. (C) Garcia's state reform plans include a special focus
on the defense sector. Defense Minister Alan Wagner has
spearheaded this defense reform effort. He has launched
initiatives to reduce corruption and to gve Peru more
effective control over its sovereign space, but the
centerpiece reform is to refocus the military away from
supposed conventional threats from neighboring countries and
toward existing transnational threats of narcotics
trafficking, international terrorism and Venezuelan-backed
"Bolivarian" destabilization (Refs).


4. (C) Your visit gives us an opportunity to identify
priority areas of cooperation in the context of our larger
shared interests, support Peru's incipient defense reform
effort, and fortify the political-military dimension of an
already-strong regional partnership. We have identified a
number of priority issues for the draft agenda worked out by
Post and Washington. They are the following:

Regional Security Picture:

-- A discussion of regional challenges and dynamics.

-- Peru's interest in reforming its military to meet the
challenges of transnational crime (narcotics trafficking and
terrorism).

Security Cooperation Enablers:

-- Article 98: The GOP has repeatedly told us that an Article
98 Agreement as such will be difficult, but that an avenue
for an accord might come through adjustments to the 1952
U.S.-Peru Military Agreement (1952 Agreement),which
established the Military Assistance Advisory Group (MAAG) in
Embassy Lima. GOP counterparts told us several months ago
that they had engaged the services of an international legal
expert resident in Lima to determine if sufficient
flexibilities exist in the 1952 Agreement to accommodate our
Article 98 concerns (and/or a SOFA-like arrangement.)

-- SOFA: We believe the Peruvians are trying to reduce the
controversy normally associated with SOFA agreements by
trying to put the accord in the context of longstanding
bilateral or international agreements (1952 Agreement). We
should not be unduly concerned with formalities or
unwittingly put the cart before the horse in focusing on the
viability of using such an agreement as a basis for further
discussion. Rather, our priority should be to get the GOP to
understand that a SOFA will facilitate our growing mil-mil
relations and therefore that SOFA discussions should go at
the top of our bilateral discussions, and to deal with other
secondary issues as they come up.

Expanding Peru's Peacekeeping Capabilities:


-- We understand informally that the Peruvians are close to
signing the proposed 505 Agreement that would give them
access to USD 4.4 million of PSOI funds to help better equip
and train units that will participate in global peacekeeping
operations.

Military-Military Relations

-- Military Education: Much of what passes for education and
training in the Peruvian army in particular remains mired in
the outdated, nationalistic concept of the Velasco Era. We
should emphasize our willingness not only to extend training
opportunities through IMET (within our limited IMET budget),
but also to help the Peruvians enrich and update their own
strategic studies curriculum within their military academies.

-- DOS/DTRA Assistance Visit/Stockpile Management: In March,
the DOS/DTRA team made a highly successful visit to Peru.
Now we should press for follow-up. The Peruvians have excess
stockpiles that they can neither maintain nor use, and some
of these weapons have already been siphoned to the FARC. We
should take this opportunity to emphasize how modernization
and trimming unusable arms caches can pay off in the form of
better and more secure stockpile management, including
improvements to facilities.

-- Customs P-3: The Peruvians have approved Customs P-3
flights in principle, but have put into place a number of
onerous conditions, which we believe should be worked out in
a special P-3 sub-group technical meeting scheduled for
Wednesday 6/27. It would be useful, however, to welcome
their cooperation on this issue and express our eagerness to
clear out remaining roadblocks and get this initiative moving.

-- Ship Visits: The GOP has recently taken to requesting full
crew lists for visiting US Navy ships. We have underscored
that such a requirement could impede future ship visits.

Comment: Interest Strong, Sensitivities Remain
-------------- -

5. (C) Peru's interest in building up the political-military
dimension of our solid bilateral partnership is genuine and
strong, but sensitivities remain. Following Defense Minister
Wagner's March visit to Washington, there was a flurry of
news reports regarding the U.S.'s supposed ambitions to
establish a military base in Peru when the Manta CSL lease in
Ecuador lapses. GOP officials have firmly denied such
reports, which continue to surface from time to time. The
GOP sees an opportunity in the post Manta environment, but to
avoid counterproductive blowback we need to be extremely
careful in framing this issue, particularly in our public
interventions.
STRUBLE