Identifier
Created
Classification
Origin
09LIMA1169
2009-08-12 23:14:00
CONFIDENTIAL
Embassy Lima
Cable title:
PRESIDENT GARCIA ON STATE OF THE UNION
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C O N F I D E N T I A L LIMA 001169
SIPDIS
E.O. 12958: DECL: 08/12/2019
TAGS: PGOV ECON SOCI EINV SNAR KCRM PE
SUBJECT: PRESIDENT GARCIA ON STATE OF THE UNION
REF: A. LIMA 01010
B. LIMA 01131
Classified By: Ambassador P. Michael McKinley for
reasons 1.4 (b) and (d).
C O N F I D E N T I A L LIMA 001169
SIPDIS
E.O. 12958: DECL: 08/12/2019
TAGS: PGOV ECON SOCI EINV SNAR KCRM PE
SUBJECT: PRESIDENT GARCIA ON STATE OF THE UNION
REF: A. LIMA 01010
B. LIMA 01131
Classified By: Ambassador P. Michael McKinley for
reasons 1.4 (b) and (d).
1. (C) Summary: President Alan Garcia delivered his customary
state of the union address on July 28, marking the 188th
anniversary of Peru's independence. His speech was more
inclusive, conciliatory and less self-congratulatory than
previous years, prompting some to speculate that recent
social unrest and the global economic downturn have put his
administration into a more defensive mode. The President's
address included a list of the GOP's accomplishments, a
series of proposed reforms and an appeal for citizens to
eschew violence and support their government. In political
terms, Garcia's address implied a slight shift to the left,
probably in an attempt to boost his low approval ratings. But
as Garcia enters the fourth year of his presidency, he
confronts the same basic challenge he faced when he took
office in July 2006: i.e., how to turn Peru's robust growth
into benefits for the entire population. Some observers
assert that Garcia is unlikely to carry out major reforms in
his final two years just as the electoral pre-season gets
underway. Others contend that he still has an opportunity to
spread Peru's economic growth more evenly, thereby keeping
the lid on social unrest and preserving his future political
prospects. End Summary.
Two "Great Objectives"
--------------
2. (SBU) Breaking with his usual protocol and to underscore
his intention to reach out more broadly, President Garcia
shook hands with each and every legislator present before
delivering his 90-minute state of the union address from
Congress on July 28. Perhaps mindful of his low approval
rating (around 20%),he exhorted Peruvians to renew their
faith in their government and democracy, as a brighter future
lay ahead. For example, he stated, "Let us strengthen our
confidence, our self-esteem and our optimism...in just twelve
years (2021) we should reach the bi-centenary of our
independence as a first world country, developed and just."
Calling them "two great objectives", he said that he would
protect Peru's democratic order from internal and external
radical threats and its economy from the effects of the
global financial crisis. He acknowledged social discontent,
that mistakes had been made, and promised to respond to the
population's legitimate demands, but without giving in to the
sort of violence that took place in Bagua last June 5. With
respect to justice, he promised to reduce the number of
inmates who had languished in jail without proper sentences.
Regarding corruption, he said that convicted dishonest
officials would be sent off to a special prison in the Amazon
jungle. Garcia also announced that the GOP had budgeted two
billion soles (approximately $663 million) for the Military's
Basic Defense Nucleus, in order to modernize Peru's Armed
Forces. He warned that "Whoever seeks to attack the
Fatherland will be in for a terrible surprise, as Peru is
prepared to defend itself in every field."
Accomplishments Highlighted
--------------
3. (SBU) Garcia recounted a list of achievements made during
his second administration, including a reported 50% drop in
the country's level of illiteracy, 1,500 km of roads paved
over the last three years, four times the number of cell
phone connected since 2005, 389,000 potable water points
serving 2 million people and the construction of 177,000
low-income homes. He said that domestic natural gas
consumption increased from 220 million cubic feet per day in
2006 to 338 million in 2009, adding that the use of
gas-powered vehicles rose from 1,800 in 2006 to 66,000 in
2009. In a nod to those citizens fearing that Peru's gas
reserves might be running low, he indicated that domestic
consumption would be a priority and said, "Let me be clear...
we will urge the exporting companies to make more
discoveries, which I'm sure are out there, but..the gas is
for Peru's development, and later for export, if there is
enough of it." Garcia also highlighted that back in July
2006, a gallon of 90 octane gasoline cost 12 soles and 99
centavos, but that the current price at the pump has dropped
to 9 soles 55 centavos.
4. (SBU) In the area of electrification, Garcia stated that
an "amazing" 3,045 population centers have been hooked up
with electrical service for the first time, thanks to an
investment of 607 million soles. He vowed to boost national
power production over the next 12 months to 1,121 megawatts
-- a 27% increase from current levels. Regarding agriculture,
he said the sector grew 6.7% in 2008, mainly on rice, potato,
corn, meat and dairy products, and that 50,000 more hectares
of crops were planted than in the previous year. He also
described a number of completed and planned large irrigation
projects. On health, he thanked congress for integrating some
seven thousand clinics and health centers with the major
hospitals and EsSalud to create a "progressive and
sustainable" universal health insurance system. He said that
education was advancing in an "irreversible way" and that
129,000 teachers have been trained. Regarding labor matters,
he said that the newly-created Contract Services
Administration (CAS) provided vacation and social security
benefits to some 80,000 workers who had previously not been
eligible because they were under non-personal services
contracts, and that civil servants unfairly dismissed during
Alberto Fujimori's administration had been reinstated.
Proposed Reforms
--------------
5. (SBU) Garcia also announced a series of proposed reforms
on decentralization, education, health, justice, civil
service and anti-poverty. Among the most controversial, he
proposed a popular decentralization project ("nucleos
ejecutores") that includes involving 18 to 25 year-old youths
in the decentralization process and increasing funding for
regional and local governments and municipalities so that
they could more expeditiously carry out viable infrastructure
projects. In addition, the President indicated he would
propose electing 60 of Congress' 120 legislators half-way
through the five-year legislative period, and promised to
hold a referendum if his proposal was turned down by
Congress.
Reactions and Appraisals
--------------
6. (SBU) President Alan Garcia enters the fourth year of his
presidency facing the same principal challenge that
confronted his government since he took office in July 2006:
how to turn Peru's strong growth into meaningful benefits for
the entire population. The global economic downturn and the
specter of renewed social unrest could threaten his plans to
attract more foreign investment. In his speech, Garcia gave
Peru's entrepreneurs, its youth and his Economic and Finance
Ministers kudos for the country's still relatively strong
economic performance. Although Peru's economy grew by a
healthy 9.8% pct in 2008 (with an inflation rate of 6%),some
economists believe that growth this year could be as high as
3%, but that Garcia's forecast of 6% GDP growth for 2010 and
2011 was optimistic.
7. (SBU) Even some of Garcia's critics acknowledge that the
GOP has made progress in reducing poverty and expanding the
national infrastructure. But many believe Peru is still
lagging in health, education, public safety, decentralization
as well as in the fight against the Shining Path (SL),drugs
and corruption. Some accuse Garcia of being disingenuous on
decentralization by blaming regional and local authorities
for failing to execute public resources for infrastructure
projects. The decision to introduce a runoff vote in regional
elections could also be complicated. Some argue bureaucratic
red tape is the real root of the decentralization problem and
that the idea of creating "special implementation teams" to
work within the strictures of the National System of Public
Investment (SNIP) will only exacerbate problems and internal
conflicts in rural areas.
8. (SBU) According to GOP statistics, poverty rates dropped
from 48.7% in 2005 to 44.5% in 2006 and to 39.3% in 2007. But
36% percent of Peru's 29 million people remain mired in
poverty, and polling suggests that many of them don't believe
they have benefited from Garcia's free-market policies.
Discontent over uneven distribution of economic benefits and
Garcia's investor-friendly measures has boiled over several
times, continues to be exploited by his ideological foes, and
contributed to his low approval rating, which has dropped
back down around 20% in some polls. On the flip side,
Garcia's domestic political opponents still remain weak and
divided, with no viable alternative program or leader yet in
sight.
9. (SBU) On August 10, newly-appointed Prime Minister Javier
Velasquez Quesquen was grilled on Garcia's state of the union
address during the congressional hearings to confirm the
President's new cabinet. Various deputies voiced their
concerns about decentralization and the lack of progress in
the fight against poverty. One deputy noted that poverty in
the Amazon region is 71% and 56% in the highlands. Others
criticized perceived GOP inaction in both the anti-narcotics
and anti-corruption fights, noting that Shining Path
terrorists allied with narcotraffickers remain active Upper
Huallaga Valley (UHV) and the Apurimac and Ene River Valley
(VRAE) coca production zones. Some said they did not believe
that corruption will be overcome simply by building a special
prison, while others remain troubled over reports of military
and police complicity with narcotrafficking in the VRAE.
Comment: In a More Defensive Mode?
--------------
10. (C) The Garcia administration's capacity has been
diminished by two scandal-driven cabinet changes in less than
one year. Garcia has also begun to face increased political
challenges from opposition groups and others currently
aligned with his APRA party that are jockeying for position
in advance of the November 2010 regional elections and the
April 2011 presidential elections. Latent potential for
social violence remains high among the native Amazonian
population and in the restive south. It is not yet clear if
this discontent can be channeled into the electoral process,
but some observers believe it's too late for Garcia to carry
out significant state reforms during the fourth year of a
five-year term. Just the same, others believe that he still
has a window of opportunity to demonstrate that his
administration can meaningfully distribute some of the
prosperity accumulated by his free market policies. Spreading
the wealth could still go a long way towards reducing social
tensions, preserving Garcia's political options and paving
the way for a relatively smooth future transition of power.
End Comment.
MCKINLEY
SIPDIS
E.O. 12958: DECL: 08/12/2019
TAGS: PGOV ECON SOCI EINV SNAR KCRM PE
SUBJECT: PRESIDENT GARCIA ON STATE OF THE UNION
REF: A. LIMA 01010
B. LIMA 01131
Classified By: Ambassador P. Michael McKinley for
reasons 1.4 (b) and (d).
1. (C) Summary: President Alan Garcia delivered his customary
state of the union address on July 28, marking the 188th
anniversary of Peru's independence. His speech was more
inclusive, conciliatory and less self-congratulatory than
previous years, prompting some to speculate that recent
social unrest and the global economic downturn have put his
administration into a more defensive mode. The President's
address included a list of the GOP's accomplishments, a
series of proposed reforms and an appeal for citizens to
eschew violence and support their government. In political
terms, Garcia's address implied a slight shift to the left,
probably in an attempt to boost his low approval ratings. But
as Garcia enters the fourth year of his presidency, he
confronts the same basic challenge he faced when he took
office in July 2006: i.e., how to turn Peru's robust growth
into benefits for the entire population. Some observers
assert that Garcia is unlikely to carry out major reforms in
his final two years just as the electoral pre-season gets
underway. Others contend that he still has an opportunity to
spread Peru's economic growth more evenly, thereby keeping
the lid on social unrest and preserving his future political
prospects. End Summary.
Two "Great Objectives"
--------------
2. (SBU) Breaking with his usual protocol and to underscore
his intention to reach out more broadly, President Garcia
shook hands with each and every legislator present before
delivering his 90-minute state of the union address from
Congress on July 28. Perhaps mindful of his low approval
rating (around 20%),he exhorted Peruvians to renew their
faith in their government and democracy, as a brighter future
lay ahead. For example, he stated, "Let us strengthen our
confidence, our self-esteem and our optimism...in just twelve
years (2021) we should reach the bi-centenary of our
independence as a first world country, developed and just."
Calling them "two great objectives", he said that he would
protect Peru's democratic order from internal and external
radical threats and its economy from the effects of the
global financial crisis. He acknowledged social discontent,
that mistakes had been made, and promised to respond to the
population's legitimate demands, but without giving in to the
sort of violence that took place in Bagua last June 5. With
respect to justice, he promised to reduce the number of
inmates who had languished in jail without proper sentences.
Regarding corruption, he said that convicted dishonest
officials would be sent off to a special prison in the Amazon
jungle. Garcia also announced that the GOP had budgeted two
billion soles (approximately $663 million) for the Military's
Basic Defense Nucleus, in order to modernize Peru's Armed
Forces. He warned that "Whoever seeks to attack the
Fatherland will be in for a terrible surprise, as Peru is
prepared to defend itself in every field."
Accomplishments Highlighted
--------------
3. (SBU) Garcia recounted a list of achievements made during
his second administration, including a reported 50% drop in
the country's level of illiteracy, 1,500 km of roads paved
over the last three years, four times the number of cell
phone connected since 2005, 389,000 potable water points
serving 2 million people and the construction of 177,000
low-income homes. He said that domestic natural gas
consumption increased from 220 million cubic feet per day in
2006 to 338 million in 2009, adding that the use of
gas-powered vehicles rose from 1,800 in 2006 to 66,000 in
2009. In a nod to those citizens fearing that Peru's gas
reserves might be running low, he indicated that domestic
consumption would be a priority and said, "Let me be clear...
we will urge the exporting companies to make more
discoveries, which I'm sure are out there, but..the gas is
for Peru's development, and later for export, if there is
enough of it." Garcia also highlighted that back in July
2006, a gallon of 90 octane gasoline cost 12 soles and 99
centavos, but that the current price at the pump has dropped
to 9 soles 55 centavos.
4. (SBU) In the area of electrification, Garcia stated that
an "amazing" 3,045 population centers have been hooked up
with electrical service for the first time, thanks to an
investment of 607 million soles. He vowed to boost national
power production over the next 12 months to 1,121 megawatts
-- a 27% increase from current levels. Regarding agriculture,
he said the sector grew 6.7% in 2008, mainly on rice, potato,
corn, meat and dairy products, and that 50,000 more hectares
of crops were planted than in the previous year. He also
described a number of completed and planned large irrigation
projects. On health, he thanked congress for integrating some
seven thousand clinics and health centers with the major
hospitals and EsSalud to create a "progressive and
sustainable" universal health insurance system. He said that
education was advancing in an "irreversible way" and that
129,000 teachers have been trained. Regarding labor matters,
he said that the newly-created Contract Services
Administration (CAS) provided vacation and social security
benefits to some 80,000 workers who had previously not been
eligible because they were under non-personal services
contracts, and that civil servants unfairly dismissed during
Alberto Fujimori's administration had been reinstated.
Proposed Reforms
--------------
5. (SBU) Garcia also announced a series of proposed reforms
on decentralization, education, health, justice, civil
service and anti-poverty. Among the most controversial, he
proposed a popular decentralization project ("nucleos
ejecutores") that includes involving 18 to 25 year-old youths
in the decentralization process and increasing funding for
regional and local governments and municipalities so that
they could more expeditiously carry out viable infrastructure
projects. In addition, the President indicated he would
propose electing 60 of Congress' 120 legislators half-way
through the five-year legislative period, and promised to
hold a referendum if his proposal was turned down by
Congress.
Reactions and Appraisals
--------------
6. (SBU) President Alan Garcia enters the fourth year of his
presidency facing the same principal challenge that
confronted his government since he took office in July 2006:
how to turn Peru's strong growth into meaningful benefits for
the entire population. The global economic downturn and the
specter of renewed social unrest could threaten his plans to
attract more foreign investment. In his speech, Garcia gave
Peru's entrepreneurs, its youth and his Economic and Finance
Ministers kudos for the country's still relatively strong
economic performance. Although Peru's economy grew by a
healthy 9.8% pct in 2008 (with an inflation rate of 6%),some
economists believe that growth this year could be as high as
3%, but that Garcia's forecast of 6% GDP growth for 2010 and
2011 was optimistic.
7. (SBU) Even some of Garcia's critics acknowledge that the
GOP has made progress in reducing poverty and expanding the
national infrastructure. But many believe Peru is still
lagging in health, education, public safety, decentralization
as well as in the fight against the Shining Path (SL),drugs
and corruption. Some accuse Garcia of being disingenuous on
decentralization by blaming regional and local authorities
for failing to execute public resources for infrastructure
projects. The decision to introduce a runoff vote in regional
elections could also be complicated. Some argue bureaucratic
red tape is the real root of the decentralization problem and
that the idea of creating "special implementation teams" to
work within the strictures of the National System of Public
Investment (SNIP) will only exacerbate problems and internal
conflicts in rural areas.
8. (SBU) According to GOP statistics, poverty rates dropped
from 48.7% in 2005 to 44.5% in 2006 and to 39.3% in 2007. But
36% percent of Peru's 29 million people remain mired in
poverty, and polling suggests that many of them don't believe
they have benefited from Garcia's free-market policies.
Discontent over uneven distribution of economic benefits and
Garcia's investor-friendly measures has boiled over several
times, continues to be exploited by his ideological foes, and
contributed to his low approval rating, which has dropped
back down around 20% in some polls. On the flip side,
Garcia's domestic political opponents still remain weak and
divided, with no viable alternative program or leader yet in
sight.
9. (SBU) On August 10, newly-appointed Prime Minister Javier
Velasquez Quesquen was grilled on Garcia's state of the union
address during the congressional hearings to confirm the
President's new cabinet. Various deputies voiced their
concerns about decentralization and the lack of progress in
the fight against poverty. One deputy noted that poverty in
the Amazon region is 71% and 56% in the highlands. Others
criticized perceived GOP inaction in both the anti-narcotics
and anti-corruption fights, noting that Shining Path
terrorists allied with narcotraffickers remain active Upper
Huallaga Valley (UHV) and the Apurimac and Ene River Valley
(VRAE) coca production zones. Some said they did not believe
that corruption will be overcome simply by building a special
prison, while others remain troubled over reports of military
and police complicity with narcotrafficking in the VRAE.
Comment: In a More Defensive Mode?
--------------
10. (C) The Garcia administration's capacity has been
diminished by two scandal-driven cabinet changes in less than
one year. Garcia has also begun to face increased political
challenges from opposition groups and others currently
aligned with his APRA party that are jockeying for position
in advance of the November 2010 regional elections and the
April 2011 presidential elections. Latent potential for
social violence remains high among the native Amazonian
population and in the restive south. It is not yet clear if
this discontent can be channeled into the electoral process,
but some observers believe it's too late for Garcia to carry
out significant state reforms during the fourth year of a
five-year term. Just the same, others believe that he still
has a window of opportunity to demonstrate that his
administration can meaningfully distribute some of the
prosperity accumulated by his free market policies. Spreading
the wealth could still go a long way towards reducing social
tensions, preserving Garcia's political options and paving
the way for a relatively smooth future transition of power.
End Comment.
MCKINLEY