US embassy cable - 05LIMA2554

C O N F I D E N T I A L SECTION 01 OF 02 LIMA 002554 
 
SIPDIS 
 
E.O. 12958: DECL: 06/07/2015 
TAGS: PE, PGOV 
SUBJECT: FOREIGN MINISTER ON PONDERING INITIATIVE ON 
NARCOTICS 
 
 
Classified By: Ambassador J. Curtis Struble for Reason 1.4 (B, D) 
 
1.  (U)  This is an action message for WHA and INL.  See para 
6. 
 
2.  (C)  In the course of a meeting to discuss Venezuelan 
meddling with Peruvian extremist groups, Foreign Minister 
Rodriguez Cuadros told the Ambassador that the inroads 
Bolivarian movements have made among cocaleros in Bolivia and 
Ecuador (sic) leave him convinced that there needs to be a 
U.S. ) Andean San Antonio II conference to review the fight 
against narcotics.  The Foreign Minister said that he and 
President Toledo had mused on the situation.  While the basic 
multi-pronged approach (interdiction, eradication and 
development) to the fight against narcotics was sound, there 
needed to be some adjustments.  Rodriguez Cuadros expressed 
concern that the agricultural chapter of the FTA could 
mortally wound traditional Andean producers.  Peru did not 
have the means to offer the sort of compensation Mexico had 
provided to domestic producers facing market opening under 
NAFTA.  That compensation had not been effective in any 
event, the Foreign Minister judged, though illegal migration 
to the United States had provided something of a pressure 
release.  The release value in Peru, he feared, would be 
cultivation of coca and opium poppy.  The Foreign Minister 
said that he was considering language encouraging a review 
and/or a San Antonio II conference in the joint communiqu 
that the Andean Community will issue when its Presidents meet 
in Lima in July.  He offered to have a confidential dialogue 
with us on the matter. 
 
3.  (C)  The Ambassador said he was without instructions on 
the issue but, speaking personally, he thought trying to 
address this issue within the Andean Community was a mistake. 
 Venezuela,s agenda would not line up with those of Colombia 
and Peru, while the government of Bolivia (and perhaps 
Ecuador) would not have the ability anytime soon to take 
forward-looking decisions.  On the issue of the FTA 
agricultural chapter, the Ambassador said, the issue was 
often misidentified.  Peruvian traditional agriculture was in 
a crisis and would remain in one with or without an FTA.  The 
minifundia of the mountain provinces were simply too small to 
allow farmers to escape poverty.  The Embassy was working 
with GOP agencies to develop a strategy that would push the 
export-oriented productive chain into the Sierra and absorb 
excess traditional labor in more productive activities. 
 
4.  (C)  Rodriguez Cuadros acknowledged that addressing the 
issue within the Andean Community might not be the best way, 
but insisted there needed to be a dialogue on the matter 
either between Peru and Colombia and the United States or 
bilaterally. 
 
5.  (C)  Comment:  A couple of different factors appear to be 
intersecting in the Foreign Minister,s mind.  The Government 
of Peru is concerned (we believe with reason) that the 
increased pace of eradication in Colombia is displacing coca 
cultivation in this direction.  At the same time, higher 
prices for coca leaf are fueling the determination of radical 
cocaleros to avoid eradication through any and all means.  A 
number of senior GOP officials have voiced dismay that the 
Administration,s FY-06 budget request reduces resources 
earmarked for Peru by sixteen million dollars; we believe 
that the Foreign Minister sees a San Antonio II conference as 
a means to leverage more development assistance out of 
consumer nations.  As regards the FTA agricultural chapter, 
the Foreign Ministry is out of line with Peru,s trade 
negotiators.  The latter have, to be sure, called repeatedly 
for flexibility on the U.S. side citing the threat of 
increased coca cultivation.  That said, Peru,s chief FTA 
negotiator and his boss have repeated told the Ambassador 
that a chill wind blows from the Foreign Ministry in the 
director of the agreement.  Recently Ambassador Alzamora, who 
is the principle MFA official on FTA issues, published an 
op/ed highlighting his concern over the impact the agreement 
might have on sierra agricultural producers. 
 
6.  (C)  Recommendation and Action Request:  By happy 
coincidence, the country team is briefing the Prime Minister, 
the head of Devida and the Ministers of Foreign Affairs, 
Interior and Defense this Friday on U.S. assistance levels. 
Our purpose in doing so is to convey the message that (a) our 
assistance is greater than the GOP thinks; in particular the 
FY-06 request level for the fight against narcotics will 
still be well above the average level of assistance in the 
1990s (b) other USG obligations are putting pressure on our 
budget and Peru should expect USG assistance to decline, 
particularly as its growth rate drives up per capita income 
(c) the GOP needs, therefore, to have a budget plan that 
takes on some of the activities supported by the 
international community and (d) Peru needs to reach an 
article 98 agreement with us to retain valuable assistance 
that is slipping away.  The Ambassador recommends that the 
Department provide instructions by COB Thursday for him to 
tell the Foreign Minister officially that calling for a 
review of drug policy in the Andean Community declaration 
would be unwelcome and unhelpful.  Instead, we suggest that 
we identify the upcoming visit of INL DAS Jonathan Farrar as 
an opportunity to begin a bilateral discussion of Peru,s 
concerns regarding our joint efforts to fight narcotics. 
 
STRUBLE