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