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UNCLAS LIMA 001591 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON ETRD EFIN PE
SUBJECT: SCENE SETTER FOR DEPUTY SECRETARY NEGROPONTE 
 
¶1.  (SBU) Your visit provides an excellent opportunity to 
build on the success of President Garcia's recent trip to 
Washington and to reaffirm our message that democratic 
government and openness to trade and investment, coupled with 
proactive policies to improve social justice, are the best 
means of reducing poverty and expanding social inclusion in 
Peru. 
 
 ¶2.  (SBU) President Garcia and Foreign Minister Garcia 
Belaunde are pleased that tangible progress was made in 
obtaining U.S. congressional approval of the Peru Trade 
Promotion Agreement (PTPA) during their April 24 to 25 visit 
to Washington.  President Garcia has told us he is delighted 
with the policy-level dialogue he has with Washington; since 
his inauguration on July 28, 2006, he has twice visited the 
White House, and President Bush phoned him to consult before 
his trip to South America.  In the past three months, Garcia 
has received Secretary Paulson, the Director of AID, the 
Deputy US Trade Representative, and Southcom Combatant 
Commander Stavridis.  We have used high-level visits to 
emphasize different aspects of President Bush's opportunity 
agenda for Latin America, from free trade to access to 
capital for the poor.  Because Peruvians sometimes see us as 
being more concerned about economic rather than social 
issues, we see great value in focusing our public diplomacy 
message during your visit on public education.  The USG has 
three highly innovative programs to improve Peru's public 
education system to enable a broader sector of the population 
access to the full range of economic and social benefits. 
Educational reform is a top priority for the Garcia 
government and a subject of considerable public/press 
attention. 
 
¶3.  (SBU) Getting US Congressional approval of the PTPA is 
currently the government's highest foreign policy priority. 
Garcia has talked about the benefits and importance of the 
agreement at every meeting with USG officials.  He considers 
the PTPA an essential component of his democratic, 
free-market vision of government, which he has contrasted to 
the autocratic "Bolivarian" populism espoused by President 
Hugo Chavez.  Garcia remains convinced that insertion into 
the global economy is the best means to alleviate the poverty 
that afflicts nearly half of all Peruvians, and he has backed 
his words with policies favoring macro-economic stability and 
encouraging foreign investment.  Peru's economy continues to 
surge: an average of five per cent growth between 2001-2005, 
seven per cent in 2006, and eight per cent projected in 2007. 
 Fueled in part by high mineral prices, exports and per 
capita GDP figures have significantly increased over the past 
five years.  The government has used this largess to begin 
efforts to direct the benefits of growth to the provinces and 
to the poor. 
 
¶4.  (SBU) Despite the macroeconomic success, deep-seated 
poverty remains a fundamental political challenge.  Nearly 
half of all Peruvians, concentrated in the southern highlands 
and Amazonian lowlands, live below the poverty line.  In the 
2006 presidential elections, radical populist Ollanta Humala 
seized on widespread discontent in these areas to come within 
six percentage points of winning the presidency.  Garcia 
knows that if his government is to succeed, economic growth 
and open markets must reduce poverty and extend material 
benefits to a majority of Peruvian citizens. 
 
¶5.  (SBU) A key part of the government's plans for reform is 
the GOP's efforts to rejuvenate a badly underperforming 
educational system.  In February, the Garcia Administration 
won a highly publicized showdown with the radical public 
teacher's union SUTEP, when Minister of Education Jose 
Antonio Chang implemented mandatory teacher testing and 
announced the results: 50 percent of public school teachers 
could not perform simple math, and 30 percent were 
functionally illiterate.  SUTEP issued a public apology for 
the results, and the government seized the initiative to 
announce plans to upgrade school facilities, buy new 
textbooks, and increase teacher training.  A survey by the 
University of Lima in February showed 59 percent of those 
polled supported the GOP's efforts. 
 
¶6.  (SBU) Garcia's social policy consists of two 
inter-related planks.  The first is to consolidate Peru's 
social support programs, reduce overhead costs, and ensure 
that public funds get directly into the hands of those who 
need them the most.  The second is to significantly increase 
social spending, with a focus on education, clean water and 
electrification.  Most analysts credit Garcia for the energy 
and vision he brings to conceptualizing plans for social 
reform, but implementation is often slowed by the 
administrative shortcomings of the central government and by 
municipal and regional governments ill-prepared to assume a 
greater role in managing social welfare programs. 
 
¶7.  (SBU) The themes struck by President Bush during his 
Latin America visit--strengthening democracy, investing in 
people, improving education and health, and expanding free 
trade--reflect the policy priorities of the Garcia 
administration.  Your visit is a timely opportunity to 
underscore these convergences.  We hope in particular to 
highlight three innovative but little known USG programs 
aimed at providing greater opportunity to the poor by 
improving public primary education.  They are the Center for 
Excellence in Teacher Training (which was launched during 
President Bush's 2002 trip to Peru), Aprendes, and Preparate 
por la Vida.  The Center for Excellence (CETT) trains primary 
school teachers to better impart reading, writing and math 
skills to their students.  Aprendes combines teacher training 
with greater parental involvement in schools; it has had such 
striking results in the region where it operates that a 
Canadian mining company is spending 18 million dollars to 
expand it to another area of Peru.  Preparate por la Vida is 
a new five million dollar, five year Department of Labor 
funded program to help working children return to school. 
 
¶8.  President Garcia has told me that he very much enjoyed 
your dinner conversation in Washington and looks forward to 
your visit.  I join him in extending a heartfelt welcome. 
STRUBLE