PERU'S NEW PRIME MINISTER: REFORMED RADICAL,

C O N F I D E N T I A L LIMA 001653

SIPDIS

E.O. 12958: DECL: 10/15/2018
TAGS: PGOV PREL PINR PE
SUBJECT: PERU'S NEW PRIME MINISTER: REFORMED RADICAL,
YEHUDE SIMON

REF: LIMA 1639

Classified By: Amb. P Michael McKinley for reasons 1.4b and d.


1. (C) Summary: President Garcia has named Yehude Simon, the
respected Regional President of Lambayeque, as Peru's next
Prime Minister. A political pragmatist with a radical past,
Simon's appointment has helped stem the hemorrhaging from a
corruption scandal (ref) and shore up Garcia's vulnerable
left-of-center flank. Observers differ on whether the
appointment is brilliant, risky or both -- with some
speculating President Garcia wants to promote Simon's
candidacy for the 2011 presidential elections and others
suggesting the independent and relatively inexperienced
regional leader could flame out fast in this high-octane,
high-turnover job. Despite Simon's appeal across the
political spectrum, some on the right express concern that he
retains elements of his former radical ideology. The
Embassy's interaction with Simon has been uniformly positive.
End Summary.

Prime Minister Yehude Simon, a Reformed Radical
-------------- --

2. (U) President Garcia on October 11 announced he would
select as new Prime Minister (succeeding Jorge Del Castillo)
the widely respected President (Governor) of the northern
region of Lambayeque, Yehude Simon. A political independent
with leftist political roots, Simon has appealed to diverse
groups across the political spectrum with a focus on
pro-market growth reinforced by social programs in his native
Lambayeque. First elected to Lambayeque's regional
presidency in 2002 with 32% of the vote, Simon was the only
Regional President re-elected in 2006, when he increased his
vote share to 40%. As Regional President, Simon served six
months as the head of Peru's national governor's association
where he acted as the regions' principal interlocutor with
the central government. Simon actively and publicly
supported the free trade agreement with the United States as
well as U.S. Southern Command's 2006 New Horizons bilateral
humanitarian exercise, which took place in Lambayeque.


3. (C) From 1985 to 1990, Simon served as a Congressman for
the leftist umbrella party United Left and served on
Congress's Justice and Human Rights committee. Reportedly
frustrated with his inability to affect change in Congress,
Simon opted for a more radical political path by becoming
director in 1987 of the magazine Cambio and by founding in
1991 the Free Fatherland Movement (MPL). Both organizations
served as political fronts for the terrorist group MRTA, and
in 1992 the Alberto Fujimori government (1990-2000) arrested
Simon on charges of verbal support ("apologia") for
terrorism. Fujimori's special terrorism courts ("Jueces Sin
Rostro") sentenced Simon to 20 years in prison, where he
served eight years and underwent a political rehabilitation
program. (The special terrorism courts were subsequently
ruled unconstitutional.) Supported by a range of
establishment political figures from former Justice and
Foreign Minister Diego Garcia Sayan to recent Production
Minister Rafael Rey, Fujimori's successor, Valentin Paniagua,
the interim President during Peru's transition back to
democratic rule, released Simon from prison and expunged the
conviction from his record in 2000 -- a half step short of a
formal "pardon". Since his release, Simon has publicly
renounced his former beliefs and reaffirmed his commitment to
working peacefully within the established political system.


4. (U) Simon studied veterinary science at the National
University of Lambayeque and Political Science and Law at the
Universidad Alas in Lima. He is married to Nancy Valcarel
Herrera and has three children. Simon was born on July 18,

1947.

Response to Corruption Scandal, Shore Up Left Flank
-------------- --------------

5. (C) Simon's appointment as Prime Minister has helped stem
the hemorrhaging caused by a corruption scandal that undid
Garcia's previous cabinet (ref). It appears also to be
designed to shore up the government's increasingly vulnerable
left-of-center flank from encroaching attacks by an
emboldened opposition. Newspaper headlines that for several
days had focused on the scandal have been supplanted by

mostly positive coverage of Simon's announced pledge to fight
corruption while reaching across political aisles, outside of
Lima to the regions, and including all sectors of society in
a broad political dialogue. Nationalist (PNP) opposition
leader Ollanta Humala scrambled to find a new line of attack,
accusing Garcia and Simon of forming a "political pact" among
unlikely partners and pointing out that Simon and Garcia
disagree on key issues. Social movement leaders who had
recently launched anti-government protests have publicly
accepted Simon's call for open dialogue.

Mixed Speculation about Garcia's Motives
--------------

6. (C) Observers differ as to the President's deeper motives
in appointing Simon, calling it either brilliant, risky or a
combination of both. One political analyst speculated that
Garcia appointed Simon only temporarily in order to calm the
political waters prior to the November APEC summit. At the
opposite extreme, others suggest Garcia wants to promote
Simon's candidacy for the 2011 presidential elections by
providing him a national platform to launch a campaign.
(Simon publicly announced his presidential ambitions several
months ago.) An APRA-party insider recently told us Garcia
would never back another APRA leader for the presidency and
had instead (at that time) tentatively selected Simon as his
preferred candidate. Still others believe that the
relatively inexperienced Simon is likely quickly to flame out
in the high-octane, heavy burn-out, high-turnover PM
position, particularly without the structural support of a
solid national party apparatus such as the APRA. (By serving
a full 26 months, Del Castillo was the third-longest serving
PM in nearly a century and the two who top him served under
dictators. In the Toledo government, PMs served an
approximate average of six month terms.)

Some Concerns on the Right
--------------

7. (C) Despite Simon's appeal across the political spectrum,
some on the right have expressed concern that Simon retains
part of his former radical ideology and is not the reformed
centrist he appears to be. Santiago Fujimori, brother of the
former President and leader of the Fujimorista congressional
bloc, publicly praised Simon's capacity for consensus
building but worried that he might implement leftist-populist
policies. Fujimori's party has also requested the
declassification of the prosecution's 1992 case against
Simon. An oil company executive who works in Lambayeque
complained to Poloff that Simon regularly pressed his company
to give additional resources to the regional government
despite the fact that the company's operations were in the
exploration phase and had not yet earned any profits. "Simon
does not understand business," said the executive. (Seeking
additional resources is the main tune of many cash-poor
regional governments, and Lambayeque has the sallest canon
resources of any region in Peru, receiving an almost
negligible sum from mining and gas.) Two rightist union
leaders alleged that some of Simon's advisors retain radical
connections, which suggested he had not fully abandoned his
own leftist past.

Constructive Relations with U.S.
--------------

8. (SBU) The Embassy's interaction with Simon has been
uniformly positive. He is approachable, pragmatic and
interested in working with us. As Regional President of
Lambayeque, he publicly supported the U.S.-Peru Trade
Promotion Agreement at a time when this was not necessarily
the politically expedient position -- framed by his convert's
understanding that economic growth must be private-sector led
and regional governments should find ways to attract private
and international investment rather than wait for central
government largesse. He also worked closely with the U.S.
Embassy and Southern Command in planning and successfully
carrying out the 2006 New Horizons bilateral humanitarian
exercise, ensuring that political flak and opposition
pot-shots were minimal. He has been an active USAID partner
in projects relating to health, education and
decentralization. This includes the institutionalization of
the Association of Regional Presidents, of which he served as
first elected -- by his Regional President colleagues --
leader.

MCKINLEY