PERU'S MILLENNIUM CHALLENGE CONCEPT PAPER

UNCLAS SECTION 01 OF 02 LIMA 000354

SIPDIS

SIPDIS

DEPT FOR WHA/AND (DAS PDuddy),/EPSC, EB, OES, S/P, E, OES
TREASURY FOR Shwarzman
STATE PASS TO EXIM, OPIC, TDA
DEPT OF ENERGY FOR SLadislaw
USAID FOR LAC/AFranco,MKarbeling, PPC/AA-Delp, Kurtz

E.O. 12958: N/A
TAGS: KMCC PGOV PREL ECON ETRD EAID SNAR PE
SUBJECT: PERU'S MILLENNIUM CHALLENGE CONCEPT PAPER

REF: A) LIMA 4770 (B) 06 STATE 187635


1. SUMMARY: The GOP's MCC Coordinator, Ben Schneider, will visit
Washington February 12-13 to meet with State, USAID, MCA indicator
institutions, and to present the GOP's draft Concept Paper to the
MCC. The concept paper focuses on two of the most important
indicators that Peru failed, Control of Corruption and improving
Immunization Rates. This cable provides information that may be
useful to USG officials receiving Mr. Schneider. END SUMMARY.

BACKGROUND
--------------

2. In November 2006, the Board of the MCC selected Peru (Ref B) as
the only new lower-middle income country (and the only new Latin
American country) to enter its Threshold Program. In December 2006,
an MCC team visited Peru to outline the Threshold Program and
explain the indicator analysis that underlies Peru's Millennium
Challenge Account (MCA) "scorecard" for FY 07 (Ref A). Prime
Minister Jorge del Castillo personally supported the MCC visit,
opening the team's three days in Lima with a meeting that included
his principal ministers.


3. The FY07 MCA scorecard gave Peru a passing green light on eight
of the sixteen indicators, up from five the year before
(http://www.mcc.gov/selection/scorecards/Peru ). The areas requiring
concerted efforts are Ruling Justly, where Peru did not pass Control
of Corruption, the only indicator that a country must pass to be
eligible for an MCA compact, and Investing in People. The MCC team
advised the GOP target its proposal to a very few key indicators
that can ensure that Peru passes the two deficient policy areas
within the given timeframe. They cautioned that the proposal should
address areas of weakness revealed in the indicator analysis, but do
so building on what is already planned or underway by the GOP and
other donors, and making explicit what additional results the
Threshold funds can help bring about.

COORDINATOR BEN SCHNEIDER
--------------

4. Peru broke new ground for government management of the MCA
process by naming a private sector businessman, Ben Schneider, as
the official GOP representative for the MCA. A Peruvian citizen,
Schneider did his university education in Israel and the U.S., where
he graduated from a management program at Harvard Business School.
Schneider is the CEO of his own successful management consulting
firm (Consulting Outsourcing and Management) and has authored
well-regarded books on management. His latest, published in
November 2006, is "Resilience: How to Build Successful Companies in
Unstable Environments." He also came into the public eye in Peru in
late November for his masterful direction of the 2006 CADE (Annual
Business Conference),Peru's most prestigious annual gathering of
business and government leaders, which he insightfully focused on
inclusion of the lower economic strata. Schneider will be in
Washington February 12-13 to present the GOP's Concept Paper to the
MCC, call on officials at State and USAID, and meet with
institutions that manage MCA indicators.

PERU'S CONCEPT PAPER: CORRUPTION AND IMMUNIZATIONS
-------------- --------------

5. Based on MCC guidance, the GOP's Concept Paper was developed with
broad participation by GOP agencies; Schneider presented the
proposal to the full cabinet on 1/31. Post has reviewed the CP and
made some suggestions. The CP proposes a focus on the Control of
Corruption and Immunization Rate indicators, the latter in the
Investing in People policy area. (The MCA immunization indicator
refers strictly to measles vaccine and DPT3, the third dose of
diphtheria, pertussis and tetanus.) Assuming continued positive
performance on the eight indicators that are already green, improved
results in these two indicators would give Peru an overall passing
score next year.


6. Under Control of Corruption, the CP underscores the importance of
public perception regarding corruption and State actions to combat

LIMA 00000354 002 OF 002


it. Within the framework of a National Anti-Corruption Plan just
approved by the Peruvian Cabinet, Peru's CP proposes a series of six
activities to guarantee the participation of civil society and the
media in monitoring and controlling corruption, and improve
predictability in the administration of justice. Activities would
be carried out by the Ministry of Justice, the Judiciary, the
Ministry of Internal Affairs (police) and the Comptroller General.
Among the activities is a public awareness campaign to sensitize the
public regarding its role in reporting and avoiding corruption, as
well as State action in controlling it.


8. The CP proposes to raise immunization rates through itinerant
immunization teams that would reach dispersed rural populations and
through improved management systems in the Ministry of Health.


COMMENT
--------------

9. The GOP realizes the corruption indicator is built in part on
perceptions, and some of these may run counter to actual trends.
For example, during the Fujimori administration, when the media were
controlled through legal and extra-legal means, corruption was
almost certainly worse than now. More transparency and
investigation of past wrongs have perhaps resulted in a public
perception of high levels of corruption today. The proposal to
communicate more actively with citizens has merit, as does the
proposal for strengthening the hot line to report police corruption.
A caveat Post has is the need to ensure an adequate response to
citizen demands to control corruption; investigative units and the
judiciary have to rise to the occasion. We have given extensive
input to Schneider on this need to show results. While there are
other needed indicators that the GOP could have focused on, such as
the sanitation component of the Natural Resources indicator,
Schneider and his team were perhaps wise to focus on the necessary
and the achievable: corruption, the area of greatest need for Peru's
society beyond MCA qualification, and immunization, an area in which
Peru has performed well in the past and should be able to turn
around quickly. USAID and other Post agencies have assisted the GOP
in both anti-corruption and immunization efforts, and the CP should
be able to build on our past efforts.
STRUBLE