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

C O N F I D E N T I A L SECTION 01 OF 03 LIMA 004568 
 
SIPDIS 
 
E.O. 12958: DECL: 10/20/2015 
TAGS: PGOV ECON SNAR PE
SUBJECT: WHA/AND DIRECTOR'S MEETINGS WITH LEADING 
PRESIDENTIAL CANDIDATES 
 
REF: LIMA 3998 
 
Classified By: Political Counselor Alexander Margulies.  Reason:  1.4(d 
). 
 
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SUMMARY 
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¶1.  (C)  SUMMARY:  WHA/AND Director Philip French, 
accompanied by the Ambassador and DCM, on 10/17, met 
separately with leading presidential hopefuls Lourdes Flores 
(Unidad Nacional alliance) and Alan Garcia (APRA party); the 
third principle contender, former Interim President Valentin 
Paniagua, was out of the country.  Flores said that her 
priorities as President would be to improve education and 
health care.  Garcia provided a spirited denunciation of 
traditional coca use, called for the total eradication of 
coca, expressed support for a Free Trade Agreement, and 
proposed the creation of a revolving fund to finance the 
transition to export-oriented crops in the Altiplano.  END 
SUMMARY. 
 
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LOURDES FLORES 
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¶2.  (C)  Flores addressed the following issues during a 
breakfast hosted by the Ambassador on 10/17: 
 
--  Priorities for Governance:  If she becomes President, 
Flores said that her top priority will be education reform. 
She recognizes that this will be difficult, and will require 
active discussion with the SUTEP teachers union (controlled 
by the Maoist Communist Party of Peru - Patria Roja).  She 
would also like to reform health services, but knows that 
this would be biting off too much so will have to wait until 
education reform is well underway.  Her other priorities are 
to pay more attention to the Armed Forces, where she sees a 
lot of discontent, judicial reform and the police.  The 
Ambassador noted that these reforms would be expensive. 
Flores agreed and said that tax reform and greater efficiency 
in revenue collection would be needed. 
 
--  The  Unidad Nacional alliance in the 2006 elections. 
Flores said that she has a firm deal with Lima Mayor Luis 
Castaneda that his National Solidarity (SN) party will remain 
tied to the Unidad Nacional (UN) alliance and together they 
will present a joint congressional slate in 2006.  She 
acknowledged that there have been some tensions in the 
coalition because Castaneda feels he won the mayoralty of 
Lima on his own, and while she admitted that this uncertainty 
will continue until a formal announcement is made, she was 
confident it will happen.  Castaneda likes to keep the public 
guessing even when he has made up his mind, Flores noted, 
citing the ambiguity he projected about whether he would 
resign as mayor to run for President.  Thus, she is not able 
now to publicly discuss the coalition, which Castaneda 
probably will not announce until 11:00 PM on the last day 
(November 9) for registration of such deals.  Flores 
predicted that UN will also draw in a couple of regional 
movements.  It has an agreement with the mayor of Cuzco to 
incorporate his wife in the UN list, and the same deal with 
the mayor of Puno.  It also expects to line up regional 
parties/movements in San Martin and Ucayali.  Flores thought 
that a recently released national poll by the respected Apoyo 
consultancy had the ratio of presidential votes to 
congressional votes about right.  That is to say, if she 
polls 30 percent in April, the UN/SN coalition will poll 20 
percent of the congressional votes (Note:  the poll gives 
both UN and SN about 10 percent of the vote each.  End Note). 
 
--  Post First Round Coalitions:  Flores assumed that either 
she or Paniagua will face Alan Garcia in the second round. 
She would like  to form a formal coalition with Paniagua's 
Accion Popular (AP) party after the first round and before 
the second.  She said she would be happy to do this for 
Paniagua if he beats her out.  The Ambassador asked who else 
she would find as acceptable coalition partners.  Her answer: 
 President Alejandro Toledo's  Peru Posible party, if it 
makes it past the four percent nationwide floor required to 
elect a candidate to Congress.   Flores thought that the 
pro-Fujimori parties were another possibility, though this 
could lead AP to withhold its support, which she thought was 
more important.  Flores added that she would not/not be 
willing to give Fujimori amnesty as the price for his 
support.  She also did not/not exclude the possibility of 
some sort of governance pact with APRA after the second round. 
--  Valentin Paniagua:  Flores described Paniagua as an 
excellent interim President, but opined that, because he has 
already held the office, he is not motivated to run again and 
face the possibility of loss.  Strong pressure from his AP 
party to run, however, will probably lead him to cast his hat 
into the ring.  She thought that AP was making a mistake in 
trying to assemble a coalition that runs from center-right to 
center-left, as this breadth will come at the cost of 
weakening the clarity of its platform and make it more 
difficult to develop the necessary internal support for 
needed reforms. 
 
--  Praise for PRA:  Lourdes had just come back from Satipo 
in Junin Department.  She was very impressed by the 
USAID-funded projects carried out by the NGO PRA to link 
agricultural producers to buyers, an initiative that she 
described as spot on.  The coast can largely take care of 
itself, Flores observed, but the mountain and jungle regions 
need a strong push from the government.  She does not favor 
hand-outs, but rather PRA-style assistance to access markets 
for higher value products.  She criticized the Toledo 
Government's trickle-down approach as "demoralizing" for the 
countryside, where more active government promotion is 
needed. 
 
--  President Toledo:  History, Flores predicted, will 
remember Toledo more fondly than his contemporaries.  Toledo, 
she noted, grossly over-promised, during his campaign and his 
presidency, costing himself and other politicians 
credibility.  She acknowledged that if she wins the 
Presidency, it will not be with enthusiasm of the voters, 
but rather with their wary acceptance, and that this 
acceptance will be lost or extended depending upon how 
quickly she moves and how credible she is seen to be. 
 
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ALAN GARCIA 
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¶3.  (C)  Former President and leader of the major opposition 
party APRA, Alan Garcia, in a 10/17 coffee hosted by the 
Ambassador, addressed the following issues: 
 
--  Narcotics:  On the narcotics issue, Garcia was a chest 
beater.  He dismissed the talk about coca leaf as being a 
sacred, traditional or culturally valuable plant.  To the 
contrary, he said, it was used both by the Incas and the 
Spanish in a cruel way to dull indians to abusive treatment. 
Garcia pronounced himself as against trying to facilitate or 
protect traditional use and said that all coca  should be 
eliminated.  He also dismissed the possibility of gradual 
reduction schemes or inducing producers to give up coca in 
favor of alternative development.  Yes there had to be a 
greater effort at rural development, he said, but the answer 
for coca is to spray it, eradicate it, get rid of it.  While 
Garcia rarely touches upon the mistakes or lessons he learned 
during his Presidency, he said that his own effort to take a 
gradual approach to controlling the coca problem was a 
mistake, noting how the growing coca problem fed terrorism. 
He praised Fujimori for winning the fight against Sendero, 
but faulting him for not being equally tough with coca. 
 
 
--  Agricultural Reform and the FTA:  Garcia opened the 
conversation by saying he has been working on a book 
concerning agricultural conversion in the Sierra.  He hopes 
to deliver it to the printer next week.  His basic thesis is 
that the Sierra needs to convert 30,000 hectares per year for 
five years from traditional crops to new higher value 
export-oriented crops like artichokes, picilla peppers, 
paprika and oregano.  This could be done, he argued, with a 
USD 110 million revolving fund.  Noting the dependence on 
export markets, WHA/AND French said, "Then you must be for 
the FTA."  Garcia said yes and turned to the two areas in the 
negotiation that are most controversial -- intellectual 
property and protection for traditional agricultural 
producers.  He dismissed the complaints about the impact of 
better IPR protections on the cost of medicines, saying the 
consequences would be insignificant.  On the agricultural 
side, he noted that APRA has an important support base in the 
provinces where traditional agricultural is an important 
concern.  If APRA dismissed this issue it would be shooting 
itself in the head, but the fact is that the traditional 
producers need to modernize.  "We have to sign the FTA at all 
costs," he said.  As he has in the past, Garcia also spoke of 
how APRA founder Victor Raul de la Haya had called for a 
special trading relationship with the United States in a 1940 
book as the way to develop Peru and Latin America.   The 
Ambassador mentioned the USAID-funded our economic service 
centers and the fine work they had done in Huanuco with 
artichokes and with pimenta piquilla in Huanta, near 
Ayacucho.  Garcia knew about the latter project, including 
the fact that it had not self-replicated yet even though the 
results were so positive.  He was very impressed 
with/supportive of the work of our contractor ADRA, but did 
not realize that we were the ones who paid the freight on 
this project. 
 
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COMMENT 
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¶4.  (C)  Flores appeared to be very comfortable with her 
current position as presidential front-runner (she leads 
Garcia by 10 points in the Apoyo poll), but also realizes 
that the campaign is just beginning.  Her assessment of 
Paniagua's and Castaneda's positions appear to be on the 
mark, as does her recognition that an alliance with the 
Fujimoristas would entail serious costs.  Garcia has a knack 
for tailoring his presentations to his audience, and his 
strong anti-coca pro-FTA message conformed to this pattern. 
While Garcia's past performance in office would lead one to 
doubt the sincerity of his apparent conversion to being more 
Catholic than the Pope on these issues, he did take the lead 
in denouncing the regional pro-coca ordinances and defending 
coca eradication when the Constitutional Tribunal was 
considering these issues last month (Reftel).  Furthermore, 
Garcia's APRA party has been a steady proponent of concluding 
an FTA with the United States, albeit with sufficient 
considerations in return for Peru's agricultural sector.  END 
COMMENT. 
STRUBLE