US embassy cable - 05LIMA3923

UNCLAS LIMA 003923 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR WHA/AND, WHA/EPSC, EB/TPP 
TREASURY FOR OASIA/INL 
COMMERCE FOR 4331/MAC/WH/MCAMERON 
 
E.O. 12958: N/A 
TAGS: KTEX, ETRD, ECON, PGOV, PREL, PE 
SUBJECT: THREE PRESIDENTS INAUGURATE INTEROCEANIC HIGHWAY 
 
Ref: 04 Lima 5397 
 
1.  (SBU) Summary.  The Presidents of Peru, Bolivia and 
Brazil met in Madre de Dios, Peru on September 8, to 
inaugurate the $810 million Interoceanic Highway project, 
which will connect Brazil's Atlantic coast to Peru's Pacific 
coast.  The governments expect the highway to be completed 
by 2010.  President Toledo predicted that in addition to 
solidifying relations between Peru and Brazil, the highway 
would help improve Peru's trade by an estimated $1 billion 
annually and help link the poorer jungle and sierra areas to 
Peru's more prosperous coast.  End Summary. 
 
Groundbreaking Ceremony 
----------------------- 
 
2.  (U) In November 2004, President Toledo and Brazilian 
President Luiz Inacio Lula da Silva signed an agreement to 
establish an Atlantic-Pacific highway through the two 
countries (Reftel).  President Toledo, President Lula and 
Bolivian President Eduardo Rodriguez convened in Puerto 
Maldonado, Peru (in Peru's southeast Amazon) on September 8 
to inaugurate the Interoceanic highway project, making the 
dream a reality.  The project, estimated at $810 million, is 
planned to connect Brazil's Atlantic coast with Peru's 
Pacific coast by 2010.  According to President Lula, Brazil 
will finance $416 million, with the Andean Promotion 
Corporation funding the rest. 
 
3.  (U) A paved highway currently exists from Brazil's 
Atlantic coast to the border town of Assis, on the Brazilian 
side of the Rio Acre.  The majority of work on the highway 
will occur in Peruvian territory, as the planned 682-mile 
road will extend through both jungle and mountainous areas 
before reaching the Pacific coast.  According to 
ProInversion (the GOP agency that handles privatizations and 
concessions), the highway project will be divided into five 
sections.  One Peruvian and two Brazilian companies have 
already obtained 25-year concessions for three sections. 
The GOP is expected to open concessions for the remaining 
two stretches of road in November. 
 
Expected Economic Gains 
----------------------- 
 
4. (U) During the ceremony, all three presidents highlighted 
the potential trade benefits of the highway.  President 
Toledo commented that the finished highway would enable Peru 
to develop its ports of Marcona, Matarani and Ilo in the 
southern part of the country.  With improved infrastructure 
connecting the jungle and sierra regions to the coast, 
President Toledo also predicted that Peru's trade should 
increase by $1 billion annually once the project is 
completed.  Brazilian President Lula noted that Brazil would 
be able to more easily transport its products to Asia via 
Peruvian ports.  The highway will also provide landlocked 
Bolivia with access to both the Atlantic and Pacific 
highways. 
 
Comment 
------- 
 
5. (SBU) The Interoceanic Highway, once completed, will not 
only connect the Atlantic and Pacific coasts, but will also 
be instrumental in connecting the more remote jungle and 
sierra areas of Peru to the more prosperous coastal areas. 
We expect Peru to benefit not only from increased trade 
through the southern ports, but also in the border regions 
of Peru, Bolivia and Brazil.  Additionally, the southern 
jungle and sierra regions, which are among some of the 
poorest areas in Peru, will benefit from improved 
infrastructure, as local products, such as fruits and 
lumber, can be shipped more easily to other areas in Peru 
while eco-tourists may find it easier to travel to these 
remote destinations. 
 
STRUBLE