US embassy cable - 05LIMA4377

C O N F I D E N T I A L SECTION 01 OF 03 LIMA 004377 
 
SIPDIS 
 
E.O. 12958: DECL: 10/08/2015 
TAGS: PREL, PE, US 
SUBJECT: PERUVIAN FOREIGN POLICY UNDER TOLEDO 
 
 
Classified By: Political Counselor Alexander Margulies.  Reason:  1.4(d 
). 
 
1.  (C)  SUMMARY:  Under the Toledo Administration, Peru's 
foreign policy has become more aligned with that of the 
United States than it has probably been at any time since the 
1968 Velasco coup.  While Peru continues to advocate policies 
that we disagree with, such as adherence to the International 
Criminal Court and the Kyoto Protocol, or the adoption of 
"innovative financial mechanisms," the Toledo Government 
played a constructive role in international consideration of 
our Iraq policy; sees eye-to-eye with us on the Global War on 
Terrorism, including support for Colombia against the FARC; 
walked away from Brazilian blandishments to form a common 
front against us on trade; came through on IAEA Board 
consideration of Iran; contributed troops to the Haiti PKO; 
and has taken the lead in resisting Venezuelan President Hugo 
Chavez's efforts to manipulate regional organizations and 
extend state control over continental energy 
production/distribution.  Some of these policies are based on 
fundamental national interests that are unlikely to shift 
with the upcoming change in government, but there are forces 
at work to peal Peru away from the U.S. that cloud this 
outlook.  END SUMMARY. 
 
2.  (U)  General Juan Velasco, who ran Peru from 1968-75, was 
the Chavez of his time -- a left-wing hyper-nationalist who 
considered U.S. influence a threat to his domestic programs 
and to national sovereignty.  With the fall of Velasco, 
things improved, but relations did not recover to their 
pre-1968 level.  The Armed Forces continued to favor the 
Soviet Union as the supplier of equipment and training. 
During successor governments, Peru maintained its strong 
idenification with the Non-Aligned Movement and sought to 
minimize U.S. access/influence, limiting foreign investment, 
rejecting readmission of the Peace Corps, and refusing to 
service the foreign debt.  Bilateral relations were often 
troubled by the fact that our values were not aligned.  Our 
human rights and democracy policies, particularly during the 
latter years of the Fujimori regime, led to tensions not only 
in the bilateral relationship, but in international 
organizations where Peru made common cause with the wrong 
crowd.  Fujimori's refusal to vote in favor of the Cuban UN 
Human Rights Commission resolution being a good example.  At 
other times, sharp economic differences, especially President 
Alan Garcia's expropriations and renunciation of debt, soured 
relations. 
 
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What has changed? 
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3.  (U)  Starting with Fujimori, the opening of foreign trade 
and investment along with ATPA benefits increased our 
influence with domestic constitutencies.  Foreign trade has 
been the most dynamic sector of the economy and responsible 
for most economic growth.  The importance of the U.S. market 
has grown from 16 to 29 percent of Peruvian exports.  We are 
the largest purchaser of non-traditional exports like mangos, 
asparagus and textiles/clothing, so our impact on job 
creation has been even greater than those already impressive 
figures indicate. 
 
4.  (U)  President Toledo and much of his economic team have 
lived and obtained an influential part of their education in 
the U.S.  They have a strong appreciation for the U.S., an 
understanding of how the U.S. operates that many of their 
predecessors lacked, and a realization of the benefits that 
economic integration, through a free trade agreement and 
increased U.S. investment, will bring to Peru. 
 
5.  (U)  Consequently, under Toledo, Peru is largely aligned 
with us on values related to economic growth/job 
creation/poverty reduction.  A significant change in this 
administration is that the spread of U.S. influence is 
largely viewed as positive.  This is illustrated by the 
invitation for Peace Corps to return, the broad high level 
access we enjoy to officials, the fact that U.S. investment 
is viewed by many within the government as being not only 
welcome but better than that of other countries in terms of 
the business values it brings.  Moreover, for the first time 
in many years we are lined up on democracy values, a shared 
vision enhanced by the negative experience that President 
Toledo and members of his administration had under the 
authoritarian Fujimori regime.  Peru's experience with 
Sendero Luminoso and Tupac Amaru Revolutionary Movement 
(MRTA) terrorism also lines up our values in that area -- 
tellingly in the case of Peru's strong cooperation with 
Colombia. 
6.  (C)  That is not to say that Peru and the U.S. are 
perfectly aligned on foreign policy issues.  The GOP 
continues to advocate foreign policies that we disagree with, 
such as adherence to the International Criminal Court and the 
Kyoto Protocol, or the adoption of "innovative financial 
mechanisms" to avoid IFI debt ceilings.  Nonetheless, the 
Toledo Government has often gone out on a limb to side with 
us on issues of major importance: 
 
--  it played a constructive role in the UNGA, the UNCHR and 
the OAS  on Iraq, making clear that it viewed Sadaam Hussein 
as being responsible for the crisis there; 
 
--  it sees eye-to-eye with us on the Global War on 
Terrorism, supporting unconditional condemnation of terrorism 
and terrorist organizations in international fora, 
cooperating with us on counter-terrorism measures, and 
providing strong support to Colombia against the FARC; 
 
--  it came through on IAEA Board consideration of Iran's 
violations of its nuclear non-proliferation obligations; 
--  it contributed troops to the Haiti PKO and has offered to 
increase its commitment when other countries in the region 
are indicating that they may pull out; and 
 
--  President Toledo has taken the lead in resisting 
Venezuelan President Hugo Chavez's efforts to manipulate 
regional organizations, such as the South American Community 
of Nations, and is opposed to Chavez's initiatives to extend 
state control over continental energy 
production/distribution.  Peru's mediation of the "Granda 
Crisis" between Colombia and Venezuela ensured that 
Colombia's concern with the GOV's practice of giving 
safehaven to FARC figures was protested. 
 
--------------------------------------------- --- 
Will it last through a change of Administration? 
--------------------------------------------- --- 
 
7.  (C)  Peru's positive foreign policy tilt towards the U.S. 
may last through a change of administration, but we will have 
to work hard to preserve it.  None of the major Presidential 
candidates has Toledo's experience in/of the U.S. nor his 
sensitivity to our point of view.  What we have going in our 
favor is: 
 
--  That US-educated officials have in the past 15 years been 
inducted into and moving up the ranks of government.  Some 
US-educated officials have, of course, been problematic (such 
as Santiago Roca in Indecopi) but most reflect a new mindset 
favorable to our interests. 
 
--  Our growing commercial/investment ties, which have 
created a powerful pro-U.S. constituency among the 
entreprenuerial class. 
 
--  The large Peruvian community in the U.S. and the view of 
our country that it has communicated to the more modest 
(B/C/D) classes. 
 
--  That Civil Society is larger, healthier and more 
influential than in the past.  Non-governmental organizations 
sometimes represent powerful opposition to our agenda 
(Article 98 and in the case of some the FTA), but more often 
than not they are lined up with us on democracy/human rights 
values issues. 
 
--  That more American tourists are coming here, there are 
more Peace Corps volunteers and our binational centers are 
crammed with students learning American English; 
people-to-people interaction is greater than ever before. 
 
8.  (C)  What we have to watch out for is: 
 
--  The Foreign Ministry.  The Foreign Affairs professionals 
will ultimately do what the administration tells it, but most 
of them have been trained in the Latin American leftist 
tradition and hold ambiguous or worse views of the U.S. 
 
--  The left.  Efforts to create a "new left" movement along 
the lines of what Lagos' socialists have done in Chile have 
not taken off.  The left remains defined as anti-business and 
anti-US.  There are folks striving to take the new approach, 
but they haven't yet been able to make inroads against the 
old thinkers. 
--  The Brazilian alternative.  We are in an undeclared 
contest here with Brazil for influence.  We are winning on 
most issues that count (FTA, market economics, pro-foreign 
investment), but the GOB is still very much in the game. 
Neither China nor the EU have in practice pursued an increase 
in their influence here as though it were a zero sum contest 
with the U.S.  Venezuela does, but hasn't made many in-roads 
beyond the far-left.  Brazil also does and in real terms is 
the more serious player.  This has been evident in the G-21 
trade initiative, in the GOB's pushing of a foreign policy 
coordination mechanism in the South American Community of 
Nations process, and in the way the GOB outmanuevered us this 
year on the Cuba UNCHR resolution, getting Peru to abstain 
for the first time under Toledo. 
STRUBLE