Wikileaks. Cable 57699

id: 57699
date: 3/22/2006 20:40
refid: 06LIMA1126
origin: Embassy Lima
classification: SECRET
destination: 06LIMA1080

DE RUEHPE #1126/01 0812040
P 222040Z MAR 06

—————– header ends —————-

S E C R E T LIMA 001126
E.O. 12958: DECL: 03/21/2016
REF: A. LIMA 1080
B. LIMA 893
Classified By: Political Counselor Alexander Margulies. Reason: 1.4(d)
1. (S) SUMMARY: On March 20, British Ambassador Richard
Ralph provided his US and Canadian colleagues with a readout
of the EU Ambassadors’ meeting with Ollanta Humala five days
earlier. Amb. Ralph said that Humala was accompanied by his
wife Nadine, who said nothing, and by a leading business
supporter Solomon Lerner Ghitis, who did elaborate on the
candidate’s remarks at a few points. Humala gave a 10 minute
opening presentation and then took questions for about an
hour. The candidate reiterated the general policy positions
he has promoted during his campaign (favoring State
participation in the economy, revision of tax stability
agreements with foreign investors, Latin American energy
integration, as well as hostility towards the Peru Trade
Promotion Agreement – Ref B), but surprised the EU
Ambassadors as coming across as more reasonable and
non-charismatic than they had expected. END SUMMARY.

2. (S) Humala predicted that he might win the election in
the first round, saying that his private polls place him 10
points ahead of the widely-watched Apoyo poll (Ref A). He
explained that his nationalist platform does not mean that he
seeks to dominate other countries, emphasizing that he wants
peace. Indeed, he saw a broad similarity of views in the
«Latin American family» (Venezuela, Brazil, Argentina,
Bolivia and Uruguay) on issues such as coca, poverty, and
economic problems that require regional solutions. Latin
America, he said, is experiencing serious political decay, as
shown by the frequent changes of Presidents in Ecuador and

3. (S) Globalization is a fact, the candidate said, but
countries need to affirm their identity. National production
needs to be strengthened and the State must be a partner in
certain strategic areas such as ports and energy. Humala
said that he would not expropriate or nationalize foreign
enterprises but the State must have a broader role. Later in
the conversation, he asked rhetorically how EU countries
would feel if their major enterprises were mostly owned by
foreigners? Humala termed the European Union a major partner
of Peru and said that he would like to strengthen that
relationship. He also termed the United States a major
partner — one with which he hopes to work closely and
intensely — but said he did not want to put all of his eggs
in one basket.

4. (S) The candidate said he wanted to promote
industrialization and transfer of technology in his country
but not on the basis of «limosnas» (charity). The UK
Ambassador observed that this statement was unclear, but the
sense of it, especially when combined with statements below,
was that the Peruvian government would play a strategic role
in directing industrial development.

5. (S) Humala observed that Peru is a mining country, but
an economy based on that activity is not sustainable. He
placed great importance on achieving food security, which he
equated with agricultural self-sufficiency. The British
Ambassador noted that an agricultural import substitution
regime is clearly in the offing.

6. (S) On coca, Humala said that he would have a zero
tolerance stance towards narcotrafficking. His focus would
be on control of chemical precursors and air/maritime
interdiction. Humala said that Peru needs a strong crop
substitution program, and he said that he would seek EU and
US assistance to identify new legal markets for coca.

7. (S) Turning to defense, Humala said that he hoped to see
more exchanges with Europe.

8. (S) Humala said that his first 90 days in office would
be crucial; his priorities would be education and health.
Addressing his attitude toward foreign-owned companies,
Humala asserted that he only wants justice on the issue of
royalties: mineral and energy prices are at record highs and
the Peruvian people are not benefiting. He said he would
make companies respect the environment, singling out the
Camisea project as an example. Humala said he wants a strong
state and asserted that he would crack down hard on

9. (S) The question and answer session began with a query
from an EU ambassador about Humala,s attitude toward a Free
Trade Agreement with the Europeans. Humala said that in
principle he favors free trade agreements but they should
have a political dimension. While saying he was not familiar
with the terms of the deal the Toledo government had struck
with the United States, Humala said the US-Peru FTA did not
meet such a standard; he did not want FTAs that will cause
disappointment in some sectors. He also noted three issues
that were of concern to him in trade deals: coca, IPR and
biodiversity. Salomon Lerner intervened at this point to say
that a cost-benefit analysis of the US-Peru FTA showed that
the costs to agriculture are too high. Humala elaborated
further that in general the US FTA collides with his
nationalist project. He spoke of the importance of
integration with Peru,s near neighbors: Argentina, Brazil,
Bolivia, Uruguay, Venezuela, and even Chile, he added as an
afterthought. Neither at this point nor elsewhere in the
conversation did Humala mention Colombia.

10. (S) Turning to the issue of mining royalties, an EU
ambassador noted that much of the problem lies not with
companies that don,t pay, but with regional and municipal
governments that cannot spend the resources transparently and
efficiently. While acknowledging the need to build this
capacity among decentralized government bodies, Humala said
that he had a problem with tax stability agreements; small
and medium
Peruvian enterprises don,t have them, he said, suggesting
this was unfair to the economic sector he wishes to promote.
Humala stated that he would review the contents of tax
stability agreements to ensure compliance but without malice
or threats, specifically mentioning Doe Run,s La Oroya mine
as an egregious violator. He added that he likes corporate
social responsibility.

11. (S) Asked about his plans for the Constitution, Humala
said that he wants a new division of power, arguing that the
Fujimori-era constitution does not benefit the country
because it prevents State participation. He added that it is
unacceptable that privatization contracts with multinationals
cannot be revised and that bad Congressmen enjoy immunity.
The Constitution must protect national entrepreneurs, he
said, adding that he would change the basic law
democratically. Salomon Lerner jumped in to note that the
Peruvian State has no industrial and economic planning
capacity because the neo-liberal model says the State doesn’t
need it. Downplaying the significance of revisions to the
juridical and tax stability agreements enjoyed by foreign
investors, Lerner said that 85 out of 194 of them had been
revised in the past four years. (Comment: The only
revisions that the US, British and Canadian Ambassadors are
aware of occurred when companies made significant new
investments and negotiated changes to the stability
agreements to cover them. End Comment.)

12. (S) In response to a question about his top five
priorities, Humala ended up listing eight: (1) change the
Constitution to permit modification of contracts; (2) create
a planning capacity; (3) reactivate national agriculture by
pumping 100 million dollars into an agricultural credit bank;
(4) coordinate with regional governments on their
infrastructure requirements; (5) decentralize industrial
capacity by creating new facilities away from the coast; (6)
institutionalize «reclamas» (social demands) by strengthening
the administrative capacity to deal with them; (7) judicial
reform; and (8) fight corruption.

13. (S) Salomon Lerner said that there would be lots of
opportunities for private investment in infrastructure
projects (presumably through private/public partnerships, but
he did not specify). The government would work, Lerner said,
to create value-added industries to process minerals, tobacco
and pharmaceuticals.

14. (S) An EU Ambassador asked Humala,s view of the South
American Community of Nations. Humala said that he has a
long term vision of a single South American entity, adding
that he would push this vision with Venezuela. He singled
out his desire to see an integrated South American energy
grid, a regional internal market and, «poles of economic

15. (S) Turning to the issue of regional governments within
Peru, Humala said that there are too many; the number should
be reduced to around five. He also mentioned his desire to
involve the Peruvian Armed Forces in infrastructure projects
around the country.

16. (S) An EU ambassador asked what Humala,s stance would
be on the fight against terrorism? Humala said that
subversion (referring to internal rather than transnational
terrorism, which he did not address) is not/not a national
problem and there is consequently no need for a policy on
Sendero Luminoso. The problem, he said, is the lack of a
state presence in certain areas of the country. Sendero
Luminoso is on its way to extinction. Young men with nothing
to do are Artemio,s (the Sendero leader in the Huallaga
Valley) holdouts. (Note: The UK Ambassador commented that
Ollanta sounded pretty close here to a controversial position
taken that same week by his father. In statements to the
press, Isaac Humala flatly dismissed any danger from SL or
MRTA and called for release of their historic leaders.
Ollanta publicly distanced himself from the latter proposal.
End Note.)

17. (S) The final question from the EU was what Humala
would do if things don,t get better under his government?
The candidate sidestepped it by saying that he would give the
people hope, adding that he is not as portrayed by much of
the media; he was not undemocratic, his party is not a family
party, and he won’t be nepotistic.

18. (S) In his summation, Humala complained that the
private retirement system (AFPs) doesn’t invest in Peru. He
said he hopes to create a new generation of leaders and hopes
that the 21st century will be the Latin American century. He
called for a Latin American Monetary Fund to facilitate that.

19. (S) The British Ambassador said that Humala came off as
modest and, surprisingly given his ability to draw voters,
uncharismatic. The candidate had a quiet voice. The EU
Ambassadors were impressed that he seemed more moderate than
they expected, though they judged that a lot of questions
about his policy positions remained unanswered.

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