This record is a partial extract of the original cable. The full text of the original cable is not available.

191453Z Jun 01


                           CONFIDENTIAL     PTQ8210

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FM AMEMBASSY LIMA
TO SECSTATE WASHDC PRIORITY 0717
INFO AMEMBASSY ASUNCION 
AMEMBASSY BOGOTA 
AMEMBASSY BRASILIA 
AMEMBASSY BUENOS AIRES 
AMEMBASSY CARACAS 
AMEMBASSY GUATEMALA 
AMEMBASSY LA PAZ 
AMEMBASSY MADRID 
AMEMBASSY MEXICO 
AMEMBASSY MONTEVIDEO 
AMEMBASSY QUITO 
AMEMBASSY SANTIAGO 
USCINCSO MIAMI FL

C O N F I D E N T I A L SECTION 01 OF 03 LIMA 003418 
 
SIPDIS 
 
                       CONFIDENTIAL 
 
PAGE 02        LIMA  03418  01 OF 03  191454Z 
E.O. 12958: DECL: 06/11/06 
TAGS: PGOV PHUM KDEM PHUM KDEM PHUM KDEM PE PEPGOV PEPGOV
SUBJECT: TOLEDO AT THE HELM 
 
REF: LIMA 03297 
 
CLASSIFIED BY AMBASSADOR JOHN R. HAMILTON FOR REASONS 
1.5(B) AND 1.5(D). 
 
¶1.  (C) SUMMARY: ALEJANDRO TOLEDO WAS TENACIOUS IN HIS 
STRUGGLE TO REACH THE PRESIDENCY AND WILL APPLY THE SAME 
TENACITY TO SUCCEED IN OFFICE.  HE COMES TO OFFICE WITH NO 
GOVERNMENT OR MANAGEMENT EXPERIENCE, HOWEVER, AND HIS 
PROPENSITY TO BE A ONE-MAN SHOW CAN BE A NAGGING 
SHORTCOMING.  NONETHELESS, IN OUR VIEW, HE WILL ULTIMATELY 
EXERCISE SOUND JUDGMENT.  HE FACES THE PRESSURE OF 
EXORBITANT CAMPAIGN PROMISES, EXPECTATIONS THAT A VICTORY 
FOR DEMOCRACY CAN SPEEDILY RESOLVE PERU'S ILLS, AND 
POLITICAL DEBTS.  HE ALSO FACES DIFFICULT ECONOMIC 
CONDITIONS.  IT IS THE ECONOMY WHERE HE WILL FOCUS, WHILE 
TRYING TO GIVE OTHER PRIORITIES, SUCH AS JUDICIAL AND 
MILITARY REFORM, THEIR DUE.  INTERNATIONALLY, HE WILL 
PURSUE AN INDEPENDENT COURSE, WHICH NEVERTHELESS WILL BE IN 
ACCORD WITH US MUCH OF THE TIME, AND BE LESS CONCERNED 
ABOUT BEING IN LOCKSTEP WITH PERU'S NEIGHBORS.  WHETHER HIS 
GOVERNMENT SUCCEEDS OR FAILS WILL ALSO BE SEEN AS A TEST 
FOR DEMOCRACY.  END SUMMARY. 
 
GOVERNING STYLE 
=============== 
 
                       CONFIDENTIAL 
 
PAGE 03        LIMA  03418  01 OF 03  191454Z 
¶2.  (C) WHEN ALEJANDRO TOLEDO ASSUMES THE PRESIDENCY JULY 
28, HE WILL BRING TO OFFICE A STRONGLY PERSONAL ONE-MAN 
STYLE.  DECISION-MAKING WILL RESIDE WITH HIM AS IT HAS 
DURING THE CAMPAIGN.  ALTHOUGH HE TALKS A GOOD GAME ABOUT 
EMPOWERING HIS MINISTERS, TOLEDO HAS NOT PROVEN ABLE TO 
DELEGATE AUTHORITY.  A SOLITARY LEADER, HE DOES NOT EASILY 
EXTEND HIMSELF OR HIS TRUST TO OTHERS.  CLOSEST TO HIM IS 
HIS WIFE, ELIANE KARP.  NEGATIVE PERCEPTIONS OF HER 
INFLUENCE HAVE LED THE TOLEDO CAMP TO LOWER HER PROFILE 
TEMPORARILY, BUT HER INFLUENCE IS SIGNIFICANT AND WILL 
LIKELY GROW. 
 
¶3.  (C) ALSO AFFECTING TOLEDO'S PERSONAL STYLE IS HIS NEED 
FOR AFFIRMATION, DOMESTIC AND INTERNATIONAL.  AT HOME, THIS 
CHARACTERISTIC, ACCORDING TO CRITICS, BRINGS HIM TO THE 
BORDERS OF A MESSIANIC COMPLEX.  AFTER THE VINDICATION OF 
HIS ROLE IN RETURNING DEMOCRACY TO PERU, TOLEDO NOW SEES 
HIMSELF AS SINGLE-HANDEDLY RESPONSIBLE FOR LIFTING PERU OUT 
OF POVERTY OR, AT A MINIMUM, OUT OF ECONOMIC RECESSION. 
THE TEST OF THE TOLEDO GOVERNMENT ON ECONOMIC ISSUES IS 
ALSO THE TEST OF TOLEDO THE MAN - HIS PERSONAL SUCCESS OR 
FAILURE BOUND UP WITH THAT OF HIS GOVERNMENT.  ON THE 
INTERNATIONAL SCENE, TOLEDO'S NEED FOR APPROVAL INFLUENCES 
HIS ATTITUDE TOWARDS THE USG.  HE HARBORS SOME RESENTMENT, 
FOR EXAMPLE, THAT WE DID NOT BACK HIM OPENLY WHEN HE 
OPPOSED FUJIMORI AND SOUGHT INTERNATIONAL RECOGNITION.  HE 
WILL EXPECT TO BE TREATED ON EQUAL FOOTING WITH WORLD 
LEADERS, INCLUDING WITH PRESIDENT BUSH, AND WILL USE THE 
ATTENTION ACCORDED HIM BY OTHERS, REGARDLESS OF THE MERITS 
OF THE COMPARISON, AS A BASELINE. 
 
                       CONFIDENTIAL 
 
PAGE 04        LIMA  03418  01 OF 03  191454Z 
¶4.  (C) THE POSITIVE SIDE OF TOLEDO'S INDIVIDUALISM IS HIS 
TENACITY AND HIS DETERMINATION TO SUCCEED.  HE IS PROUD OF 
BEING A FIGHTER, DEMONSTRATED IN HIS TWO-YEAR STRUGGLE TO 
GET TO THE PRESIDENTIAL PALACE.  HE COMES TO THE JOB, 
HOWEVER, WITH NO EXPERIENCE AS AN ELECTED OFFICIAL OR IN 
MANAGEMENT.  THIS SHORTCOMING WILL MAKE THE DECISION-MAKING 
PROCESS IN TOLEDO'S GOVERNMENT APPEAR DYSFUNCTIONAL, BUT WE 
BELIEVE TOLEDO'S DECISIONS ON THE KEY ISSUES OF IMPORTANCE 
TO THE U.S. WILL ULTIMATELY BE THE RIGHT ONES. 
 
PRESSURES 
========= 
 
¶5.  (C) CHIEF AMONG THE PRESSURES TOLEDO WILL FACE ARE THE 
EXPECTATIONS HE HAS RAISED WITH HIS CAMPAIGN PROMISES. 
NEWSPAPERS HAVE PUBLISHED LISTS OF THEM AND THERE ARE MANY 
THAT WILL BE KEEPING SCORE.  ONE ANTI-TOLEDO DAILY, FOR 
EXAMPLE, DID NOT WAIT A DAY AFTER THE JUNE 3 ELECTIONS TO 
HIGHLIGHT THAT TOLEDO ADVISORS HAD ALREADY BACKTRACKED ON 
TWO PROMISES RELATED TO TAXES.  TOLEDO'S POPULAR SUPPORT 
WILL HELP HIM WEATHER MUCH OF THE CRITICISM, AT LEAST IN 
THE FIRST THREE TO SIX MONTHS IN OFFICE.  HE IS AWARE THAT 
HE HAS TO BE PUBLICLY AGGRESSIVE IN REDUCING THOSE 
EXPECTATIONS, AND HAS ALREADY BEGUN TO DO SO, SPEAKING OF 
 
                       CONFIDENTIAL 
 
                           CONFIDENTIAL     PTQ8213 
 
PAGE 01        LIMA  03418  02 OF 03  191454Z 
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                  ------------------FAC8F9  191454Z /38 
P 191453Z JUN 01 
FM AMEMBASSY LIMA 
TO SECSTATE WASHDC PRIORITY 0718 
INFO AMEMBASSY ASUNCION 
AMEMBASSY BOGOTA 
AMEMBASSY BRASILIA 
AMEMBASSY BUENOS AIRES 
AMEMBASSY CARACAS 
AMEMBASSY GUATEMALA 
AMEMBASSY LA PAZ 
AMEMBASSY MADRID 
AMEMBASSY MEXICO 
AMEMBASSY MONTEVIDEO 
AMEMBASSY QUITO 
AMEMBASSY SANTIAGO 
USCINCSO MIAMI FL 
 
C O N F I D E N T I A L SECTION 02 OF 03 LIMA 003418 
 
SIPDIS 
 
                       CONFIDENTIAL 
 
PAGE 02        LIMA  03418  02 OF 03  191454Z 
E.O. 12958: DECL: 06/11/06 
TAGS: PGOV PHUM KDEM PHUM KDEM PHUM KDEM PE PEPGOV PEPGOV
SUBJECT: TOLEDO AT THE HELM 
 
THE NEED FOR PATIENCE. 
 
¶6.  (C) THERE IS ALSO THE QUESTION OF WHAT HE MAY OWE 
POLITICALLY TO HIS CAMPAIGN'S SUPPORTERS.  WITH ONLY 
RUDIMENTARY CAMPAIGN FINANCING RULES, THERE IS LITTLE 
INFORMATION ABOUT POSSIBLE FINANCIAL BACKERS AND THEIR 
INTERESTS.  WITH THE EXCEPTION OF THE ONE MILLION DOLLARS 
GEORGE SOROS' OPEN SOCIETY PROVIDED FOR THE JULY 2000 ANTI- 
FUJIMORI PROTESTS (CUATRO SUYOS), ONLY MEDIA BUSINESSMAN 
BARUCH IVCHER HAS BEEN IDENTIFIED AS A CONTRIBUTOR.  THERE 
ARE RUMORS THAT ANOTHER, SOMEWHAT UNSAVORY BUSINESSMAN, 
LEON RUPP, HAS BEEN A MAJOR BACKER.  RAUL DIEZ CANSECO, THE 
FIRST VP FROM AN OLD, WEALTHY LIMA FAMILY, ALSO HELPED TO 
BANKROLL TOLEDO'S CAMPAIGN. 
 
¶7.  (C) TOLEDO'S MOST PROMINENT POLITICAL DEBT IS TO 
MORALIZING INDEPENDENT FRONT (FIM) LEADER FERNANDO OLIVERA. 
FIM PLAYED THE CAMPAIGN ATTACK DOG AGAINST APRA'S ALAN 
GARCIA AND PLEDGED ITS ELEVEN LEGISLATORS TO BACK TOLEDO IN 
THE CONGRESS.  OLIVERA, HOWEVER, IS NOT VIEWED AS A 
RELIABLE POLITICAL PARTNER (REFTEL).  THE KEY FOR TOLEDO 
WILL BE TO BALANCE ANY REWARDS FOR OLIVERA AGAINST 
MAINTAINING COHESION IN HIS OWN PARTY'S RANKS.  WITHOUT THE 
FIM, THE ONLY OTHER SUBSTANTIAL CONGRESSIONAL BLOC TOLEDO 
HAS SUCCESSFULLY COURTED, TOLEDO'S LEGISLATIVE AGENDA MAY 
SUFFER. 
 
                       CONFIDENTIAL 
 
PAGE 03        LIMA  03418  02 OF 03  191454Z 
YES, IT'S THE ECONOMY 
===================== 
 
¶8.  (C) TOLEDO WILL FOCUS HIS ENERGIES ON THE ECONOMY, 
WHERE HE IS DESPERATE TO GET POSITIVE GROWTH FAST.  HE HAS 
STAKED MUCH ON REVITALIZING THE AGRICULTURE SECTOR, 
GENERATING EMPLOYMENT AND BRINGING PERU OUT OF RECESSION. 
HE HAS A SOLID, IF SOMEWHAT ECLECTIC, ECONOMIC TEAM AND IS 
BANKING ON THE LYNCHPIN CABINET APPOINTMENT OF WELL KNOWN 
INVESTMENT BANKER PEDRO PABLO KUCZYNSKI.  HIS TWO VICE 
PRESIDENTS, RAUL DIEZ-CANSECO AND DAVID WAISMAN, BRING 
BUSINESS EXPERIENCE TO THE LEADERSHIP TEAM. 
 
¶9.  (C) THE ANTENNAE ARE OUT, HOWEVER, FOR POSSIBLE TURNING 
POINTS IN HOW TOLEDO HANDLES ECONOMIC MATTERS WHEN THESE 
ARE TOUGH ISSUES AND POTENTIALLY COMPETING ADVICE AND 
INTERESTS.  ONE FEAR IS THAT HE MAY RESORT SIMPLY TO HIS 
OWN ECONOMICS EXPERTISE RATHER THAN RELYING ON OR LISTENING 
TO ADVISORS.  ANOTHER IS THE POSSIBILITY THAT HE MAY BEGIN 
TO PURSUE POPULIST MEASURES IN RESPONSE TO SOCIO-ECONOMIC 
PRESSURES AS HIS ECONOMIC RECOVERY PROGRAM EITHER TAKES 
LONGER THAN EXPECTED OR DOES NOT MEET EXPECTATIONS. 
 
¶10.  (C) NON-DOMESTIC FACTORS, BEYOND TOLEDO'S CONTROL, 
WILL ALSO INFLUENCE HOW HE DOES ON THE ECONOMY.  ON A 
MACRO-LEVEL, A SLOW DOWN IN THE U.S. AND WORLD ECONOMIES 
WILL HAVE A SIGNIFICANT EFFECT.  IF THE U.S. ECONOMY 
SLIDES, EVEN GOOD DECISIONS MAY NOT HAVE THE DESIRED 
EFFECT.  WORLD PRICES FOR PERU'S COMMODITIES AND THE 
POSSIBLE RETURN OF THE DESTRUCTIVE EL NINO WEATHER PATTERN 
ARE ADDITIONAL FACTORS THAT COULD AFFECT PERU'S GROWTH IN 
                       CONFIDENTIAL 
 
PAGE 04        LIMA  03418  02 OF 03  191454Z 
THE COMING YEARS.  MORE SPECIFICALLY, HOW THE ANDEAN TRADE 
PREFERENCES ACT (ATPA) FARES IN THE U.S. CONGRESS WILL ALSO 
BE IMPORTANT. 
 
¶11.  (C) IN ADDITION TO THE ECONOMY, WE CAN EXPECT TOLEDO 
TO DEVOTE ATTENTION TO JUDICIAL REFORM AND TO THE MILITARY. 
THE INDEPENDENCE OF THE JUDICIARY HAS RECEIVED A STRONG 
BOOST UNDER THE PANIAGUA GOVERNMENT AND IT IS LIKELY TO 
REMAIN ON THE SAME TRACK UNDER TOLEDO.  NEVERTHELESS, 
ALTHOUGH JUDICIAL INDEPENDENCE HAS BEEN LARGELY RESTORED TO 
THE STATUS QUO ANTE FUJIMORI, THE PERUVIAN JUDICIAL SYSTEM 
REMAINS IN DIRE NEED OF RADICAL REFORM AND MODERNIZATION. 
THE MILITARY, DISCREDITED FOR ITS CORRUPT LINKS TO FORMER 
INTELLIGENCE ADVISOR VLADIMIRO MONTESINOS, FACES AN 
UNSYMPATHETIC MASTER IN TOLEDO.  HE HAS PUT THE ARMED 
FORCES ON NOTICE ABOUT PURSUING CORRUPTION AND ABUSES, 
FAVORS MILITARY BUDGET CUTS AND WILL PRESS FOR GREATER 
CIVILIAN CONTROL. 
 
TOLEDO ON THE WORLD STAGE 
========================= 
 
¶12.  (C) TOLEDO IS UNLIKELY TO PURSUE POLICIES INIMICAL TO 
THE UNITED STATES.  FAMILIAR WITH THE SCOPE OF THE 
 
                       CONFIDENTIAL 
 
                           CONFIDENTIAL     PTQ8211 
 
PAGE 01        LIMA  03418  03 OF 03  191454Z 
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                  ------------------FAC904  191454Z /38 
P 191453Z JUN 01 
FM AMEMBASSY LIMA 
TO SECSTATE WASHDC PRIORITY 0719 
INFO AMEMBASSY ASUNCION 
AMEMBASSY BOGOTA 
AMEMBASSY BRASILIA 
AMEMBASSY BUENOS AIRES 
AMEMBASSY CARACAS 
AMEMBASSY GUATEMALA 
AMEMBASSY LA PAZ 
AMEMBASSY MADRID 
AMEMBASSY MEXICO 
AMEMBASSY MONTEVIDEO 
AMEMBASSY QUITO 
AMEMBASSY SANTIAGO 
USCINCSO MIAMI FL 
 
C O N F I D E N T I A L SECTION 03 OF 03 LIMA 003418 
 
SIPDIS 
 
                       CONFIDENTIAL 
 
PAGE 02        LIMA  03418  03 OF 03  191454Z 
E.O. 12958: DECL: 06/11/06 
TAGS: PGOV PHUM KDEM PHUM KDEM PHUM KDEM PE PEPGOV PEPGOV
SUBJECT: TOLEDO AT THE HELM 
 
BILATERAL RELATIONSHIP, HE WILL NONETHELESS SEEK TO ENSURE 
HE MAKES HIS MARK.  IN COUNTER NARCOTICS, FOR EXAMPLE, 
TOLEDO WILL LIKELY SUPPORT COCA ERADICATION, BUT HE WILL 
INSIST ON CREATING JOBS FOR FORMER COCA GROWERS.  TO ASSIST 
THESE FARMERS, TOLEDO WILL LIKELY ARGUE FOR TRADE 
PREFERENCES ON TEXTILES AND OTHER PRODUCTS.  IN SUPPORTING 
ALTERNATIVE DEVELOPMENT, TOLEDO WILL FAVOR ALTERNATIVE 
CROPS, BUT HE MAY PROMOTE INTERNATIONAL PRICE SUPPORTS. 
OVERALL, TOLEDO HAS INDICATED HE WILL TAKE A HARD LINE 
AGAINST NARCOTICS TRAFFICKERS. 
 
¶13.  (C) UNLIKE THE INTERIM PANIAGUA GOVERNMENT, WHICH 
FAVORED WORKING IN CONSENSUS WITH ITS NEIGHBORS REGARDLESS 
OF DIFFERENCES, TOLEDO WILL PLAY A MORE INDEPENDENT ROLE IN 
REGIONAL RELATIONS.  LINKS WITH BRAZIL WILL NEED REPAIR 
AFTER THE RECENT HISTORY OF BRAZILIAN FAVORING OF FUJIMORI 
AND OF ONE OF TOLEDO'S FIRST ROUND OPPONENTS, LOURDES 
FLORES NANO.  SIMILARLY, THERE IS NO LOVE LOST WITH 
VENEZUELA'S HUGO CHAVEZ, REGARDED BY TOLEDO AND MANY IN HIS 
CAMP AS THE ANTI-DEMOCRAT.  IN ADDITION, THERE IS THE 
COMMON PERCEPTION THAT, IN PART THANKS TO CHAVEZ, 
MONTESINOS HAS BEEN SUCCESSFUL IN REMAINING A FUGITIVE. 
 
BOTTOM LINE 
=========== 
 
¶14.  (C) TOLEDO HIMSELF HAS GENERATED HIGH EXPECTATIONS FOR 
                       CONFIDENTIAL 
 
PAGE 03        LIMA  03418  03 OF 03  191454Z 
HIS PRESIDENCY.  HIS EVERY ACTION WILL BE SUBJECT TO 
SCRUTINY.  AND JUST AS HE SEEKS TO PUT HIS PERSONAL MARK ON 
HIS TENURE, SO WILL HE BE HELD PERSONALLY RESPONSIBLE.  BUT 
THERE IS MORE AT STAKE IN PERU THAN WHETHER TOLEDO SUCCEEDS 
OR FAILS.  THE DEMOCRATIC PROCESS GAVE PERUVIANS A CHOICE 
BETWEEN TWO -- FOR MANY UNPALATABLE -- CANDIDATES.  HOW 
WELL TOLEDO FARES WILL ALSO BE SEEN AS A TEST FOR DEMOCRACY 
IN PERU AND THE REGION. 
 
HAMILTON 
 
                       CONFIDENTIAL 
 
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