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Viewing cable 06LIMA2083, VISIT OF CONGRESSMAN GREGORY MEEKS TO PERU, MAY 26-

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Reference ID Created Released Classification Origin
06LIMA2083 2006-05-25 22:14 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Lima
VZCZCXYZ0005
RR RUEHWEB

DE RUEHPE #2083/01 1452214
ZNR UUUUU ZZH
R 252214Z MAY 06
FM AMEMBASSY LIMA
TO SECSTATE WASHDC 0681
UNCLAS LIMA 002083 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
FOR CONGRESSMAN MEEKS FROM AMBASSADOR STRUBLE 
 
E.O. 12958: N/A 
TAGS: ECON PGOV ETRD PE
SUBJECT: VISIT OF CONGRESSMAN GREGORY MEEKS TO PERU, MAY 26- 
28, 2006 
 
 
1. (SBU) On behalf of the Country Team, I welcome your 
visit to Peru, May 26-28.  Peru is at a historic 
crossroads, with a close presidential election on June 4 
and the opportunity to ratify the free trade agreement with 
the United States.  With a stable political system and a 
strong economy, Peru nevertheless faces political, economic 
and social challenges that the U.S. government is helping 
Peru to meet. 
 
Demographic Overview 
-------------------- 
2. (U) Peru is a country of 27.2 million people, of whom 30 
percent live in the Lima/Callao metropolitan area.  Most 
Peruvians are either Amerindians (45 percent, largely 
Quechua-speaking but also many Amazon languages) or Spanish- 
speaking mestizos (37 percent, a mixture of indigenous and 
European roots).  The remainder of the population includes 
persons of European (15 percent), African, Japanese, and 
Chinese ancestry.  Peru's distinct geographical regions are 
mirrored in a socioeconomic divide between the coast's 
mestizo-Hispanic culture and the more diverse, traditional 
cultures of the highlands and jungle area.  Although the 
Government of Peru has made progress in reducing poverty 
during the Toledo administration, almost 50 percent of 
Peruvians still live below the poverty line (less than 
$2/day), including 18 percent in extreme poverty (less than 
$1/day). 
 
The Political Scene 
------------------- 
3. (SBU) Following first round presidential elections on 
April 7, the two top vote-getters, Alan Garcia of the APRA 
party and Ollanta Humala of the Union for Peru (UPP) party, 
will face each other in a June 4 runoff.  This election 
offers voters a clear choice between two quite different 
alternatives. Garcia stands for the continuation of 
policies that have brought Peru nearly five years of five 
percent annual economic growth, respect for human rights, 
job creation and poverty reduction through market-based 
economic growth, and improved relations with the U.S. 
 
4. (SBU) Humala, in contrast, is an ally of Venezuelan 
President Chavez and Bolivian President Morales and 
advances policies that resemble theirs: a stronger 
executive promoting state intervention in the economy, 
suspicion of foreign trade and investment, and 
unsustainable, populist social programs. 
 
5.  (U) Current polls show Garcia leading Humala by more 
than 10 percent, however many analysts expect a closer race 
given that the polls likely under-represent rural areas 
where Humala is favored.  The elected president and the new 
120-member Congress (elected April 7) will take office on 
July 28. 
 
6. (SBU) President Toledo's priorities as his term winds 
down are: congressional passage of the free trade agreement 
(called Peruvian Trade Promotion Agreement or TPA) with the 
U.S. and ensuring an orderly transition to his successor. 
It appears his party, Peru Possible, will squeak into 
Congress barely garnering sufficient votes for 
representation.  Toledo in past months has climbed up from 
the lowest approval ratings in the hemisphere (consistently 
below fifteen percent) to 30 percent, the highest they have 
been since after his election. 
 
7. (SBU) Congressional election results are 95 percent 
complete, and the new Congress will probably consist of 
seven parties, with no party having more than about a third 
of the seats.  The fragmented nature of the incoming 
Congress will be a challenge for whoever wins the 
presidency. 
 
Peruvian Labor 
-------------- 
8. (SBU) The Peruvian labor movement is small and weak. 
Only 3-5 percent of Peruvian workers are members of unions. 
Nonetheless, the labor movement, particularly the Marxist- 
led National Confederation of Peruvian Workers (CGTP), is 
capable of producing large marches in the capital for 
positions it favors.  Peruvian labor opposes the TPA and 
advocates stronger labor inspections and approval of a new, 
comprehensive labor law, which has been bottled up in 
Congress for a year.  Labor, government and business sector 
representatives remain divided over a series of questions, 
the most significant being whether employers should 
continue to have the right to fire workers without 
reference to a specific cause listed in law.  Employers 
argue that they need this freedom to ensure 
competitiveness.  Labor leaders state that the ability to 
 
fire without reference to a legally defined cause has been 
used against rising labor organizers. 
 
The U.S.-Peru Trade Promotion Agreement 
--------------------------------------- 
9. (SBU) President Toledo has called the completion of a 
free trade agreement with the United States a "policy of 
State" and intends to present the TPA to the Peruvian 
Congress after the June 4 Presidential election.  The 
Toledo Administration views the TPA as a way to consolidate 
ATPDEA benefits and to energize much-needed reforms in 
education, infrastructure, government efficiency and 
competitiveness.  Proponents argue that the TPA would 
generate more jobs in the formal economy, thus enhancing 
the protection of worker's rights.  The TPA's environmental 
chapter would require Peru to enforce its extensive but 
often unenforced environmental laws. 
 
10. (SBU) U.S. companies present in Peru support the TPA 
because it would strengthen institutions and lock in rules 
of the game, notably by establishing an effective dispute 
resolution mechanism.  Recent Peruvian public opinion polls 
show 56 percent approval of the TPA, and the private sector 
is largely supportive, with the exception of some local 
pharmaceutical firms and traditional agricultural 
producers. 
 
Strong Economic Growth has Continued 
Even in the Face of Political Uncertainty 
----------------------------------------- 
11. (U) Just-released first quarter 2006 economic results 
indicate that Peru's economy grew 6.8 percent for the 
quarter, surprising the Peruvian government and analysts 
alike.  Exports continued to play a strong role in GDP 
growth, growing 22 percent to $4.6 billion.  Imports 
reached $3.4 billion, a 28 percent increase, including 
nearly $1 billion in capital goods imports.  Although still 
under control, inflation has been inching upwards, 
registering 2.9 percent on an annualized basis during the 
first quarter of 2006. 
 
12. (U) Peru has capitalized on new trading arrangements, 
especially the Andean Trade Promotion and Drug Eradication 
Act (ATPDEA) that granted the Andean countries trade 
preferences for more than 6,500 products, and a receptive 
global economy to grow its non-services exports to $17.2 
billion in 2005 (from a base of $7.7 billion in 2002). 
Apparel/textile, agricultural and mineral exports have all 
grown impressively over the last several years, and current 
forecasts project that Peru will reach $20 billion in 
exports in 2006.  The United States remains Peru's top 
export market with $5 billion in 2005, a 37 percent year-on- 
year increase.  Trade with China continues to grow rapidly 
at 50 percent year-on-year growth to account for $1.8 
billion in exports as Peru's second most important trading 
partner. 
 
Your Schedule: Outreach Opportunities 
------------------------------------- 
13. (SBU) Your day will start with a breakfast briefing by 
Ambassador Struble and his Country Team, at his residence. 
Your outreach activities begin with a meeting with Prime 
Minister Pedro Pablo Kuczynski and Trade Minister Alfredo 
Ferrero at the Ambassador's residence.  Following that 
meeting, you have a meeting with President Alejandro Toledo 
at the Presidential Palace.  All speak excellent English. 
 
14. (SBU) The Ambassador will host a luncheon at his 
residence with representatives of the Afro-Peruvian 
community, planned to include several Afro-Peruvian members 
of the Peruvian Congress. 
 
15. (SBU) A following meeting with business leaders 
representing both Peruvian and American companies will also 
be at the residence.  These leaders can provide valuable 
insights into import/export businesses as well as the 
investment climate for U.S. firms.  They are also well 
versed in the labor, environmental and commercial 
challenges as well as opportunities present in Peru. 
 
16. (SBU) In the early evening, we have scheduled a meeting 
at the hotel with representatives of various trade unions, 
including the AFL-CIO and the National Confederation of 
Peruvian Workers (CGTP). 
 
17. (SBU) Dinner will be hosted by the Executive Director 
of the American Chamber of Commerce and will include 
leaders from Peruvian and U.S. companies. 
 
18. (SBU) We have requested telephone conversations with 
 
the presidential candidates Ollanta Humala and Alan Garcia. 
If confirmed, you would likely make these calls from the 
Ambassador's residence during the afternoon. 
 
STRUBLE