PERU: CRISIS WITH CHILE AVERTED

UNCLAS LIMA 000290 SIPDIS SENSITIVE SIPDIS E.O. 12958: N/A TAGS: PGOV PREL PE SUBJECT: PERU: CRISIS WITH CHILE AVERTED REF: A. SANTIAGO 157 ¶B. LIMA 107 (AND PREVIOUS) ¶1. (SBU) Summary: Following passage of Chilean legislation that, in effect, altered the territorial boundaries between Chile and Peru, intensive behind-the-scenes diplomacy helped avert a bilateral crisis, according to MFA contacts. Government officials are satisfied with the Chilean Constitutional Tribunal ruling that the legislation was inconsistent with the 1929 Treaty, and Presidents Garcia and Bachelet have formally declared the matter closed. The near miss underscores the precariousness of warming bilateral relations, which government officials have accused "ultra-nationalists" in Chile of seeking to undermne. End Summary. ¶2. (SBU) Intensive diplomacy helped avert a crisis between Peru and Chile, according to Foreign Ministry contacts in the Souh America office. The problem was rooted in Chilean legislation, approved in December, that sought to revise Chile's internal administrative borders but which, in effect, also altered established territorial and maritime boundaries between Chile and Peru. That is, without reference to the bilateral Treaty of 1929, the legislation incorporated slivers of land-based Peruvian territory into Chile, and seemed to do the same with Peru's territorial waters. MFA Chile desk officer told us the legislation violated the 1929 Treaty, which establishes the precise location of territorial boundaries while leaving maritime borders undefined. The legislation set off a volley of behind-the-scenes diplomatic activity, including a series of high-level meetings, Foreign Minister phone calls, at least two formal diplomatic notes, and a threat to recall Peru's Ambassador to Chile for consultations in Lima. ¶3. (SBU) The issue surfaced publicly when Peru's premier weekly news magazine (Caretas) reported mid-January that, owing to his discomfort with the Chilean legislation, President Garcia had refused President Bachelet's offer for a ride in the Chilean presidential airplane to and from President Correa's inauguration in Quito. The dispute then climbed into the daily headlines and threatened to derail the positive bilateral momentum built up since the inauguration of President Garcia in July, 2006 (ref B). (Comment: The Chilean law mirrors, in its effects if not in form, legislation approved in Peru's former Congress in late 2005 and ratified by then President Toledo, which set off a diplomatic scuffle that rattled bilateral relations. End Comment.) ¶4. (SBU) Before becoming politically unmanageable, however, the crisis was nipped in the bud by a quick Chilean Constitutional Tribunal ruling stating that the legislation was inconsistent with the 1929 Treaty between Chile and Peru. (Note: Some media outlets in Peru have credited Peruvian diplomatic pressure for the quick Chilean ruling. End Note.) Peruvian Government officials, including Foreign Minister Garcia Belaunde, expressed satisfaction with the Tribunal's ruling and hastened to pronounce the disagreement resolved. According to news reports, Presidents Garcia and Bachelet spoke by phone January 29, declared the matter formally closed, and pledged to meet soon to continue the construction of a more stable bilateral relationship. Comment: Near Miss -------------- ¶5. (SBU) The diplomatic near miss underscores the precariousness of Peru's warming relations with Chile, which both governments have made a central foreign policy priority. The thrust of that policy has been for the two neighbors to pursue their manifest shared interest in strengthening economic, commercial, political and security ties while setting aside in separate "diplomatic" channels the thorny maritime boundary dispute that has plagued relations, blocking the prospect of improvement, in the past. Foreign Ministry officials acknowledge that resolving that contentious issue, however difficult, would help set bilateral relations on a more permanent stable footing. ¶6. (SBU) If Chilean government officials explain the near crisis with reference to flawed internal government coordination (ref A),Peruvian officials have been quick to suspect something more sinister. Prime Minister Jorge Del Castillo, for example, publicly accused "ultra-nationalists" in Chile of seeking to destabilize bilateral relations. He might also have noted the acute opposition to the government's policy of rapprochement with Chile among influential circles in Peru. POWERS