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Viewing cable 07LIMA1152, CONSTITUTIONAL REFORM: MORE SMOKE THEN FIRE

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Reference ID Created Released Classification Origin
07LIMA1152 2007-04-02 17:36 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Lima
VZCZCXYZ0024
PP RUEHWEB

DE RUEHPE #1152/01 0921736
ZNR UUUUU ZZH
P 021736Z APR 07
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC PRIORITY 4820
INFO RUEHAC/AMEMBASSY ASUNCION PRIORITY 1633
RUEHBO/AMEMBASSY BOGOTA PRIORITY 4511
RUEHBR/AMEMBASSY BRASILIA PRIORITY 7268
RUEHBU/AMEMBASSY BUENOS AIRES PRIORITY 2840
RUEHCV/AMEMBASSY CARACAS PRIORITY 0265
RUEHLP/AMEMBASSY LA PAZ APR 4141
RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 9142
RUEHQT/AMEMBASSY QUITO PRIORITY 1117
RUEHSG/AMEMBASSY SANTIAGO PRIORITY 1196
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY
RUMIAAA/USCINCSO MIAMI FL PRIORITY
UNCLAS LIMA 001152 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PHUM PINR KJUS PE
SUBJECT: CONSTITUTIONAL REFORM: MORE SMOKE THEN FIRE 
 
1.  (SBU) Summary: During the 2006 Presidential election, 
candidates Alan Garcia and Ollanta Humala pledged to ditch 
the "illegal," Alberto Fujimori-inspired constitution of 1993 
and return Peru to the labor-friendly, socialist model of 
1979.  As president, Garcia has shown no desire to tamper 
with Peru's strong economic growth and relative social 
stability by fulfilling this promise.  Ignoring the nostalgic 
yearning of some in his own APRA party and strident calls 
from true believers on the far left, Garcia is forging a more 
pragmatic course of piecemeal constitutional reform.  In the 
clear absence of political support for prolonged (and 
unproductive) constitutional wrangling, the administration is 
pursuing constitutional amendments that focus narrowly on 
judicial and electoral matters such as resurrecting the 
Senate, while leaving the "liberal" economic model untouched. 
 In comparison with that of its neighbors in Bolivia and 
Ecuador, Peru's approach to constitutional reform seems a 
model of political pragmatism.  End Summary. 
 
Socialist Dream 
--------------- 
 
2.  (SBU) During the 2006 Presidential election, the top two 
candidates, Alan Garcia and Ollanta Humala, both called for 
Peru to ditch its Fujimori-era constitution and return to the 
constitution of 1979.  Returning to the 1979 Constitution is 
a cause celebre for the Peruvian left, stemming as much from 
nostalgic and political as ideological reasons.  In 1978, 
Victor Raul Haya de la Torre, renowned Peruvian socialist and 
founder of the APRA party, headed the Constitutional Assembly 
that paved the transition from military to civilian rule, and 
signed the finished document on his deathbed in 1979.  Haya's 
Constitution dictated a "social market economic model" 
("economica social del mercado") in which the state was 
afforded primacy in all economic matters, and was empowered 
to provide public services, intervene in economic sectors of 
national interest, and exercise control over foreign economic 
activities.  The 1979 Constitution also guaranteed economic 
and social rights such as the right to work, the right to 
food, and the right to attain a standard of living allowing 
for personal well-being.  Unsurprisingly, the result was 
little foreign investment and massive social spending.  Some 
observers believe the 1979 Constitution justified the first 
Garcia Administration's attempt to nationalize the banking 
and insurance sectors, and therefore helped fuel 
hyperinflation and the near meltdown of the Peruvian economy 
by 1990. 
 
The Fujimori Constitution 
------------------------- 
 
3.  (SBU) In the early 1990s President Fujimori had little 
support in Congress and was making little headway with his 
reform agenda.  With broad popular support, on April 5, 1992 
Fujimori suspended congress and convened a new constitutional 
assembly.  The resulting constitution strengthened the power 
of the presidency, reduced Congress to one body by 
eliminating the Senate, permitted the president to run for 
re-election, and restructured the Judicial branch.  However, 
the main changes were economic.  The 1993 Constitution 
enshrined a free-market ideology by removing the right of the 
state to intervene in the economy except for in health, 
education, security, and infrastructure, liberalizing the 
exchange rate regime, and guaranteeing equal treatment under 
law to foreign investment.  It also eliminated guaranteed 
economic and social rights and rolled back labor protections. 
 The constitution was approved by a narrow majority in a 1993 
referendum.  (Comment: Because the credibility of the 
referendum process was, in the view of many analysts, 
suspect, and thanks also to President Fujimori's broader 
assaults on democratic order, the 1993 document is sometimes 
referred to as the "Coup-induced Constitution" -- 
"Constitucion Golpista."  End Comment.) 
 
Constitutional Criticism 
------------------------ 
 
4.  (SBU) With the restoration of democratic rule in 2000-1, 
criticism of the Fujimori Constitution grew louder.  The main 
argument was that 1993 Constitution came into being in an era 
of de-facto (vice democratic) government and that the 
referendum 
was fraudulent.  In response, then-President 
Paniagua convened a body of legal scholars under the rubric 
of the "Project for Constitutional Reform" to study ways to 
ensure the constitutional underpinning of Peru's fledgling 
democracy was both legal and legitimate.  While the project 
made a series of formal recommendations, none of them were 
enacted.  Calls for Constitutional reform have been a steady 
part of Peru's political discussion since that time.  APRA 
members, for example, are motivated by a desire to bring back 
the document inspired by their founder.  Other groups, 
including labor unions, object to the current constitution on 
ideological grounds and urge the return of state intervention 
in the economy, stronger labor laws, and a reduction of 
foreign economic and political influence.  Criticisms of the 
1993 Constitution appeared to find political traction during 
the 2006 Presidential elections. 
 
5.  (SBU) Despite his campaign rhetoric, Garcia has not 
pushed for constitutional reform since becoming president. 
APRA insiders say Garcia understands that political support 
for profound reform is non-existent.  Moreover, he realizes 
that such reform would scare off foreign investment and 
undermine Peru's economic growth by creating uncertainty, 
possibly raising the specter of nationalizations, limiting 
labor flexibility, and mandating huge increases in social 
spending.  Senior government officials also believe that 
pursuing a constitutional assembly now -- that is, engaging 
in protracted and ultimately unproductive negotiations to 
redraw the rules of the game -- would be a tremendous waste 
of time and energy.  Summing up this view during a recent 
speech to the American Chamber of Commerce, Prime Minister 
Jorge Del Castillo commented that had Humala won the 2006 
election, Peru would be going through the same kind of chaos 
and uncertainty as Ecuador was now.  Instead, he continued, 
the government was focused on the important business of 
growing the economy and reducing poverty. 
 
6.  (SBU) The administration is moving forward with a more 
narrow constitutional reform agenda.  APRA congressman and 
Constititional Committee chairman Aurelio Pastor told us that 
his committee was pursuing minor changes of judicial and 
electoral matters, including bringing back the Senate.  He 
insisted that radical reform -- a return to the 1979 
Constitution or changing the economic model -- was not on the 
agenda, and enjoyed only minimal support in the Congress. 
UPP congressman Victor Mayorga, vice president of the 
Constitutional Committee, explained that Peru had changed 
since 1979 and, in the interest of stability, targeted 
amendments were more appropriate then was wholesale reform. 
In comments to the Ambassador, UPP congressional bloc leader 
Aldo Estrada said his party believed that necessary 
constitutional reforms could be done by Congress and that a 
new Constitutional Assembly was neither necessary nor viable. 
 Former presidential candidate Ollanta Humala and his 
Nationalist Party (PNP) remain the only group agitating for 
profound constitutional reform.  In a recent multi-party 
meeting with President Garcia regarding state reform, Humala 
took a "Constituent Assembly or nothing" position.  Separated 
from their former UPP alliance partners, however, the PNP 
reresents fewer than 20 out of 120 congressional seats. 
 
Comment: Not in the Cards 
------------------------- 
7.  (SBU) In comparison with that of is neighbors in Bolivia 
and Ecuador, Peru's approach to constitutional reform seems a 
model of political pragmatism.  Although sweeping 
constitutional change remains a rallying cry for the 
country's disaffected and is likely to continue generating 
occasional noise in an ongoing discussion, politically at 
least, it is just not in the cards. 
STRUBLE