US embassy cable - 05LIMA4773

UNCLAS SECTION 01 OF 02 LIMA 004773 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, ENRG, ETRD, PE, PGOV 
SUBJECT: A NEW ANDEAN DIALOGUE 
 
 
1. (U) Summary: In a meeting with Ambassador Struble, Andean 
Community Secretary General Allan Wagner proposed several 
ideas for strengthening the relationship between the United 
States, the Andes and Latin America as a whole.  The Andean 
Community would play a central role in the process.  Wagner 
envisions three major areas of dialogue, drugs, terrorism and 
energy security.  Wagner provided some insight into the 
evolving relationship between Venezuela and its Andean 
neighbors.  He also made a pitch for U.S. funding of Andean 
Community trade capacity building projects.  End Summary 
 
2. (U) On November 4, Ambassador Struble hosted a meeting at 
the residence with Ambassador Allan Wagner, Secretary General 
of the Andean Community (CAN).  Ambassador Wagner had just 
returned from a series of meetings in Washington, and 
Ambassador Struble asked for a read out of those meetings. 
Advisor to the Secretary General Saul Pineda and an Embassy 
Econ Officer also participated in the meeting. 
 
Regional Malaise 
-------------------- 
 
3. (U) Coming on the day of the Summit of the Americas 
meeting in Mar del Plata, Ambassador Wagner started the 
meeting by expressing concern that there is a distance 
growing between the United States and Latin America.  He 
attributed part of the cause for the distancing to the 
unsteady democracy building process presently underway in 
much of Latin America.  He also pointed to the discontent 
arising from the extreme economic inequality and the lack of 
resources in the region to satisfy public demands for rapid 
improvements in living conditions.  Wagner observed that the 
democracy building process would be long, but that headway 
was being made. 
 
4. (U) To reverse the slide in the relationship between the 
U.S. and Latin America, Ambassador Wagner proposed engagement 
on three main topics, drugs, terrorism and energy security; 
issues that are central to both the U.S. and the Andean 
countries.  Wagner will raise his proposal during an upcoming 
Inter-American Dialogue event. 
 
Drugs, Thugs and Oil 
-------------------------- 
 
5. (U) Regarding narcotics, Wagner observed that Peru and 
Ecuador were seeing a &balloon effect8, as pressure was 
being brought on Colombian producers.  Ambassador Struble 
expressed his own concern about the resilience of the drug 
trade in Peru and the affect it was having on Peru in 
general.  He cautioned, however, that the projects focused on 
the cocaleros were not entirely effective.  He recommended 
more focus on small business projects.  On the subject of 
terrorism, Ambassador Wagner suggested that one of the 
central issues could be money laundering, which is widespread 
in the region. 
 
6. (U) Wagner appeared to see a new energy dialogue as a key 
to a revived U.S.-Andean engagement and CAN,s role in the 
process.  Energy security will be a major concern to the U.S. 
and the world economy for decades to come, and most of the 
oil resources in Latin America were located in the Andes. 
Wagner suggested that a new energy dialogue between the U.S. 
and countries in the region could lead to improved relations 
between the U.S. and Venezuela.  He recommended that the 
initial discussion agenda be small, in order to encourage 
Venezuelan participation. 
 
Wither Venezuela 
--------------------- 
 
7. (U) Venezuela was a central theme for most of the meeting, 
although Wagner frequently referred to it obliquely.  He 
related how the Colombia-Venezuela relationship had been 
central to the creation and development of the CAN, and 
Colombian-Venezuelan bilateral trade has always made up the 
majority of all inter-Andean trade.  But Wagner pointed to a 
deterioration of the relationship between the two countries. 
At the same time, he noted a growing relationship between 
Colombia and Peru, which will be fortified by the eventual 
free trade agreement (FTA).  Wagner suggested that a healthy, 
active Colombia-Peru relationship would pay dividends 
throughout the region. 
 
The FTA and TCB and CAN,s Role 
--------------------------------------------- - 
 
8. (U) While Wagner expects the relationship between 
Colombia, Peru and Ecuador to be enhanced by the FTA, he 
warned that the Andean countries do not have much experience 
competing directly with developed countries such as the U.S. 
Mexico experienced a drop in employment in the first stages 
of the NAFTA, he stated.  Ambassador Wagner sees a role for 
the CAN in promoting trade capacity building so that the 
countries can take advantage of the new opportunities.  To 
that end, he asked whether the U.S. could provide additional 
funding to support CAN,s trade capacity building efforts. 
Venezuela, however, is not part of the negotiations, which 
presents a problem for the CAN.  Wagner asked if some of the 
proposed U.S. funding could be used in Venezuela.  Ambassador 
Struble responded that there would be several problems with 
that approach. 
9. (U) Ambassador Struble noted that the trade experience of 
the Andeans countries has been varied, and the Andeans should 
be learning from each other.  Peru, for instance, was 
experiencing a boom in some of its agricultural sectors. 
Ambassador Struble suggested that CAN could provide a 
valuable service by establishing best practices seminars.  As 
an example, he pointed out that Peru was having some success 
developing agriculture along the sierra.  The other Andean 
countries could benefit from learning how Peru is linking 
businesses on the coast with the sierra. 
Energy Security 
-------------------- 
 
10. (U) Ambassador Wagner reported on energy meetings that 
took place in Caracas, Venezuela.  He stated that he did not 
predict that any of the countries would alter their general 
approaches to coincide of reinforce Venezuela,s policies, 
implying that Chavez, oil diplomacy strategy was not working. 
 
11. (U) Comment:  Ambassador Wagner appears to be looking for 
a mission of the CAN.  He is correct in identifying drugs, 
terrorism and energy as key interests for the U.S. and in the 
region, but he was short on specifics about how and why 
CAN,s role was necessary and indispensable.  CAN can and 
should play a significant role in trade capacity building, 
but the inclusion of Venezuela presents a major obstacle. 
Wagner is correct in seeing major changes for the Andeans in 
the near future.  The FTA will have a major impact, boosting 
the economies of fostering economic reforms.  It will also 
likely accelerate the separation between the FTA countries 
and Venezuela. 
STRUBLE