(U) SECRETARY CLINTON'S APRIL 6 MEETING WITH

S E C R E T STATE 034680


NOFORN

E.O. 12958: DECL: 04/06/2029
TAGS: OVIP HILLARY CLINTON PREL PTER SNAR ECON
KSUM, PE
SUBJECT: (U) SECRETARY CLINTON'S APRIL 6 MEETING WITH
PERUVIAN FOREIGN MINISTER GARCIA BELAUNDE

CLASSIFIED BY ASSISTANT SECRETARY OF STATE THOMAS A.
SHANNON FOR E.O. 12958, REASONS 1.4 (b) AND (d).


1. (U) APRIL 6, 02:30 PM - 03:00 PM


2. (U) PARTICIPANTS:

UNITED STATES
The Secretary
WHA A/S Thomas Shannon
PA Spokesperson Robert Wood
S Staff
Dorothy Ngutter (WHA notetaker)

PERU
Foreign Minister Jose Antonio Garcia Belaunde
Ambassador Luis Valdivieso (Appointed)
DCM Manuel Talavera
Javier Sanchez Checa, Deputy Political Counselor

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SUMMARY
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3. (S) Summary: In her first meeting with Peruvian
Foreign Minister Garcia Belaunde, the Secretary laid out
USG thinking on the upcoming Summit of the Americas, and
noted the new Administration would seek to set a new
tone for hemispheric relations and will focus on issues
that will have a positive impact on the lives of
citizens in the Hemisphere. The Secretary offered to
work with the GOP to support poverty reduction efforts
as well as the fight against narcotics trafficking, and
to promote stability in the region. FM Garcia Belaunde
suggested the United States consider an increase of
capital for the Inter-American Development Bank (IDB)
targeted to help the most vulnerable Latin American
economies. He advised that the announcement of a change
in U.S. policy on Cuba might be most effective during or
after the summit. Garcia Belaunde also asked for a
clear message from the United States in support of Peru
as a politically and economically stable partner in the
region. Garcia Belaunde confirmed that President Garcia
will participate in the Summit. End summary.

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Summit of the Americas and U.S.-Hemisphere Relations
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4. (C) The Secretary said the Obama Administration
intended to set a new tone for hemispheric relations.
She said the United States would like the upcoming
Summit of the Americas to focus on social inclusion,
energy, and environment, adding that there is much work
to do together. The Secretary noted that some countries
apparently seek to focus the upcoming Summit on Cuba.
The Administration is looking at changing specific
aspects of our Cuba policy, such as remittances and
travel restrictions. The Secretary emphasized that it
will be important not to let the summit get diverted
from its main agenda.


5. (C) Garcia Belaunde agreed with the Secretary that
poverty reduction, environmental issues, and social
inclusion should be the summit's main focus. That said,
he highlighted the economic crisis as the critical issue
needing attention. For many years, Garcia Belaunde
observed, Latin American countries have sought access to
U.S. markets. He noted those countries that desire free
trade agreements have them (Chile, Peru, CAFTA
countries) or are working towards them (Colombia,
Panama). However, there are other countries that oppose
FTAs for ideological reasons. With this in mind, it
might be helpful for the United States to talk about
special financing provisions for the least developed
countries in the region instead of focusing on free
trade. The foreign minister suggested an announcement
of replenishment of capital for Inter-American
Development Bank (IDB) would be especially helpful to
the most vulnerable countries. He observed the G-20
meeting seemed to focus on remedies for Eastern Europe,
and there was concern that Latin America may be left
out.


6. (C) Regarding the summit, Garcia Belaunde said he
recently read an article stating that the Obama
Administration would announce a Cuba policy before
Trinidad. To do so, he stated, would be a mistake, as
it would appear that the United States had not listened
to regional perspectives. Moreover, an early
announcement would open the issue to criticism/debate at
the summit, since whatever policies are announced could
well fall short of some people's expectations. Garcia
Belaunde specifically noted that President Garcia, who
is normally very reluctant to attend such gatherings,
will participate in the Summit of the Americas.

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Social Cooperation and Poverty Reduction
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7. (C) The foreign minister inquired about the future of
the Millennium Challenge Corporation program, as the
program has been a good vehicle to address broader
social issues. He added that Peru had some expectations
regarding the MCC program. Secretary Clinton offered to
continue working with Peru to ensure that economic
benefits reached its most vulnerable citizens. She
noted that successful implementation of the ongoing
Threshold program would help Peru meet indicators
necessary for consideration for an MCC Compact. The
Secretary also noted USG assistance through Development
Assistance funds and Child Survival and Health funds
will continue to support Peruvian efforts to address
social issues.


8. (C) The foreign minister remarked that the Garcia
Administration had in fact reduced poverty from about 46
percent (when he took office) to 36 percent. President
Garcia had set a goal of reducing poverty to 30 percent
by 2011. Garcia Belaunde noted that strong growth over
a seven-year period had helped with poverty reduction.
However, he added, "there are no better social programs
than a good job."

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Security Cooperation
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9. (C) Turning to security issues, the Secretary
underscored USG commitment to working with Peru to
counter narcotics trafficking and other transnational
crime. She noted that Sendero Luminoso seems to
continue to present a challenge. With $37 million in
assistance (FY09) funds, she said, we hope to be as
effective as possible in helping Peru address security
issues. The Secretary asked for feedback, as the U.S.
goal is to help Peru succeed against Sendero Luminoso
and other security threats.


10. (C) Garcia Belaunde remarked that Sendero Luminoso
has been reduced to remnants that are more closely
linked to narcotics trafficking. He emphasized that
Sendero was small, existed only in isolated areas, and
presented a limited threat today. With Mexican cartels
operating in Peru and the informal mining sector being
used to launder money, the foreign minister underscored
the security challenge is not just about drugs; it is
much more complicated. Noting successes in northern
Peru on alternative development, Garcia Belaunde
suggested a broader, more comprehensive approach to
addressing narcotics trafficking and organized crime.
Finally, the foreign minister said Peru and Colombia
enjoy a cooperative security relationship, aimed at
preventing the use of the border areas for trafficking
or by the FARC.

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Promoting Regional Stability
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11. (S/NF) The Secretary asked the foreign minister for
his advice on influencing regional leaders and
preventing destabilizing actions. Garcia Belaunde said
that Bolivia, Ecuador, and Venezuela were all different
cases. Ecuador, he noted, has the weakest economy,
lacks fiscal flexibility because it is dollarized, and
has been battered by decreasing exports and remittances.
He stated that Ecuadorian President Correa had kept his
distance from Chavez, adding that he is a well-educated
man, but "a very sensitive person."


12. (S/NF) Garcia Belaunde said Bolivian President
Morales is very dependent on Venezuela and President
Chavez, observing that he is not very sophisticated.
Admitting that Peru has had problems with Morales, he
advised approaching him through President Lula. Chavez,
Garcia Belaunde remarked, is not what he used to be.
Chavez is now poorer and less aggressive and Garcia
Belaunde suggested that the summit might provide an
opportunity to approach Chavez. "I have known Chavez
for some years now; you can deal with him," he stated.
(Nicaraguan President) "Ortega, on the other hand, is a
lost cause," the foreign minister declared.

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A Message of Support
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13. (C) Garcia Belaunde pointed to excellent U.S.-Peru
relations. The foreign minister emphasized that Peru
needs a message from the USG. A clear message that Peru
is a politically and economically stable country with a
sound FTA would be a good message for private investors
and others to hear. Ambassador Valdivieso added that
Peru's problem is not one of financing, but of
confidence. He gave the example of the exclusion of
Peru from the Federal Reserve's short facility, which
other countries had received (South Korea, Mexico).
Peru instead was advised to seek IMF facilities that
carry conditionalities. Access for Peru to the Reserve
facility, Valdivieso argued, would be a positive signal
of Peru's economic and political stability. The
Secretary offered to raise the idea of graduating Peru
to enable access to facilities with the Federal Reserve.
She also noted that the G-20 also had discussed removing
conditionality and the stigma it carries.


14. (C) Garcia Belaunde thanked the Secretary for the
United States' strong leadership and offered Peru's help
in addressing regional issues. He mentioned that he
understood the Secretary may be visiting South America
soon and noted Peru would be delighted to have her
visit. The Secretary thanked the foreign minister for
his offer and said, while a trip had yet to be planned,
she would consider a stop in Peru.


CLINTON