VZCZCXYZ0000
RR RUEHWEB

DE RUEHPE #3396/01 2401303
ZNY CCCCC ZZH
R 281303Z AUG 06
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC 2033
INFO RUEHBO/AMEMBASSY BOGOTA 3816
RUEHBR/AMEMBASSY BRASILIA 6953
RUEHBU/AMEMBASSY BUENOS AIRES 2558
RUEHCV/AMEMBASSY CARACAS 9740
RUEHLP/AMEMBASSY LA PAZ AUG QUITO 0638
RUEHSG/AMEMBASSY SANTIAGO 0810
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHDC

C O N F I D E N T I A L LIMA 003396 
 
SIPDIS 
 
SIPDIS 
 
COMMERCE FOR 4331/MAC/WH/MCAMERON 
USTR FOR BHARMAN AND MCARRILLO 
 
E.O. 12958: DECL: 08/24/2016 
TAGS: TBIO ETRD ECON PGOV PE
SUBJECT: BIO FOR GOP SPECIAL TRADE ENVOY HERNANDO DE SOTO...

id: 76367
date: 8/28/2006 13:03
refid: 06LIMA3396
origin: Embassy Lima
classification: CONFIDENTIAL
destination: 06LIMA3283|06LIMA3385
header:
VZCZCXYZ0000
RR RUEHWEB

DE RUEHPE #3396/01 2401303
ZNY CCCCC ZZH
R 281303Z AUG 06
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC 2033
INFO RUEHBO/AMEMBASSY BOGOTA 3816
RUEHBR/AMEMBASSY BRASILIA 6953
RUEHBU/AMEMBASSY BUENOS AIRES 2558
RUEHCV/AMEMBASSY CARACAS 9740
RUEHLP/AMEMBASSY LA PAZ AUG QUITO 0638
RUEHSG/AMEMBASSY SANTIAGO 0810
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHDC

----------------- header ends ----------------

C O N F I D E N T I A L LIMA 003396 
 
SIPDIS 
 
SIPDIS 
 
COMMERCE FOR 4331/MAC/WH/MCAMERON 
USTR FOR BHARMAN AND MCARRILLO 
 
E.O. 12958: DECL: 08/24/2016 
TAGS: TBIO ETRD ECON PGOV PE
SUBJECT: BIO FOR GOP SPECIAL TRADE ENVOY HERNANDO DE SOTO 
 
REF: A. LIMA 3283 B. LIMA 3385 
 
Classified By: Ambassador J. Curtis Struble, Reasons 1.4 (b) and (d) 
 
¶1. (U) Following is biographic information for Hernando de 
Soto, whom President Garcia on August 17 named as his 
"personal representative" to obtain the U.S. Congress' 
ratification of the U.S.-Peru Trade Promotion Agreement 
(PTPA), as per REF A.  De Soto is also charged with 
developing the necessary internal reforms to allow as many 
Peruvians as possible the opportunity to benefit from the 
agreement.  See REF B for analysis of De Soto's new role. 
 
¶2. (U) Hernando DE SOTO Polar was born in Arequipa, Peru, on 
June 2, 1941.  When De Soto was five years old, his father (a 
lawyer) was exiled from Peru following a military coup and 
moved to Geneva to work for the International Labor 
Organization (ILO).  De Soto grew up and was educated in 
Europe, mainly in Switzerland, but spent his summers in Peru 
because his father wanted his boys to keep their Latin 
American culture.  He did his post-graduate work at the 
Graduate Institute of International Studies (HEI) in Geneva, 
and then served as an economist for the General Agreement on 
Tariffs and Trade (GATT, predecessor to the WTO), as 
President of the Executive Committee of the Copper Exporting 
Countries Organization (CIPEC), as managing director of 
Universal Engineering Corporation (Continental Europe's 
largest consulting engineering firm), and as a principal of 
the Swiss Bank Corporation Consultant Group.  De Soto also 
financed projects in hydroelectric and nuclear power plants 
worldwide. 
 
¶3. (U) In 1979, after a successful business career in Europe, 
De Soto returned to a Peru plagued by poverty and years of 
military rule.  He did some work in the mining business, 
served as Governor of Peru's Central Reserve Bank, and became 
President Alberto Fujimori's personal representative and 
principal advisor in 1990.  Some credit De Soto for changing 
Fujimori's economic policies from a Keynesian to a neoliberal 
approach, and convincing Fujimori that he had to abide by the 
rules set by the international financial institutions.  These 
policies were responsible for the stabilization of Peru's 
economy and the taming of inflation, thereby allowing Peru to 
return to international financial markets.  De Soto resigned 
from the GOP two months before Fujimori's self-coup in April 
1992, reportedly due to differences with Fujimori's infamous 
de-facto National Security Advisor, Vladimir Montesinos. 
 
FROM THE SHINING PATH TO "THE OTHER PATH"... 
-------------------------------------------- 
 
¶4. (U) De Soto is best-known for his continuing efforts to 
answer the question "why are some countries rich and some 
poor?"  He founded the non-profit Institute for Liberty and 
Democracy (ILD) in 1980, and between 1988 and 1995, De Soto 
and ILD were responsible for some 400 initiatives, laws, and 
regulations aimed at modernizing Peru's economic system.  In 
particular, ILD designed and ran the reform of Peru's 
property system which gave land titles to more than 1.2 
million families and helped some 300,000 firms transition 
from the informal to the formal economy.  This latter task 
was accomplished through the reduction of red tape and 
restrictive registration, licensing and permit laws that made 
the opening of new businesses excessively time-consuming and 
far more costly than most of the largely poor population of 
Peru could afford.  De Soto also conceived Fujimori's 
counternarcotics strategy, one of the earliest efforts to 
combat drug trafficking by reducing coca farmers' dependence 
on the drug crop.  De Soto and his admirers claim that these 
reforms played a major role in the decline of the Marxist 
Shining Path terrorist group, because, by granting titles to 
small coca farmers in the two main coca-growing areas, he 
deprived the Shining Path of safe haven, recruits and money. 
The Shining Path attempted to kill De Soto at least three 
times. 
 
¶5. (U) De Soto's work attracted international attention, and 
some 30 heads of state have invited him to carry out programs 
in their countries (including Mexico, El Salvador, Egypt, the 
Philippines, Haiti, Tanzania, Russia, Ghana, and Indonesia). 
His admirers have included Ronald Reagan, Bill Clinton, 
Vladimir Putin, Hamid Karzai, the World Bank, and The 
Economist.  Currently, de Soto and ILD are focused on 
designing and implementing capital formation programs to 
empower the poor in Africa, Asia, Latin America, the Middle 
East, and former Soviet Nations.  De Soto is also a 
commissioner of the ILO's World Commission on the Social 
Dimension of Globalization. 
 
¶6. (U) De Soto has published two international best-sellers 
thus far which propose granting more access to financing to 
micro-enterprises in emerging markets, "The Other Path" 
(1989) and "The Mystery of Capital: Why Capitalism Triumphs 
in the West and Fails Everywhere Else" (2000).  These books 
argue that people in developing countries lack an integrated 
formal property system, leading to only informal ownership of 
land and goods.  The lack of an integrated system of property 
rights makes it impossible for the poor to leverage their 
informal ownerships into capital (as collateral for credit), 
which De Soto claims would form the basis for 
entrepreneurship and poverty reduction.  His books include 
blueprints for economic reform in the third world which focus 
on streamlining government, reducing red tape, and harnessing 
the strengths of the extended informal economies. 
 
POLITICAL ASPIRATIONS 
--------------------- 
 
¶7. (C) De Soto also has sometimes revealed political 
aspirations. In January 2001, he announced the formation of 
his own political movement, Popular Capital, and attempted to 
join the presidential race.  However, he was unable to 
collect the necessary signatures in time to register for the 
April 2001 elections and his movement quickly faded.  Upon 
learning of De Soto's inability to register, Alan Garcia 
publicy offered de Soto the president slot on a De 
Soto-Garcia APRA (Garcia's party) ticket.  De Soto told the 
Ambassador that APRA leaders formalized that offer, but that 
he declined because he would have been a figurehead president 
susceptible to the whims of disciplined APRA congressmen. De 
Soto told the Ambassador that before he accepted his current 
role, President Garcia had offered him the Prime Minister 
position. De Soto said he turned it down because he had 
invested years of effort building his and ILD's reputation, 
and he wanted to expend that capital wisely and not be held 
accountable for the APRA government's policies.  He accepted 
his "president's personal representative" role because it 
allows him to avoid formal membership in the Garcia 
Administration while furthering ILD's objectives of bringing 
smaller businesses into the formal Peruvian economy so they 
can benefit from liberalized trade. 
 
¶8. (U) De Soto is single (divorced) and speaks English 
fluently.  His brother, Alvaro, is a career diplomat who has 
spent the last 24 years at the UN.  Alvaro has held the rank 
of Under-Secretary-General at the UN since 1999, and has been 
the Secretary-General's Special Coordinator for the Middle 
East Peace Process and his Personal Representative to the 
Palestinian Liberation Organization and Palestinian Authority 
since May 2005. 
 
AWARDS/RECOGNITION 
------------------ 
 
¶9. (U) In 1999, Time magazine chose Hernando de Soto as one 
of the five leading Latin American innovators of the 20th 
century, and in 2004, the magazine included him among the 100 
most influential people in the world.  De Soto was also 
listed as one of 15 innovators "who will reinvent your 
future" according to Forbes magazine's 85th anniversary 
edition.  He was awarded the Milton Friedman Prize for 
Advancing Liberty in 2004, and in 2005, the readers of 
Prospect magazine (UK) and Foreign Policy (USA) ranked him 
among the top 13 "public intellectuals" in the world.  De 
Soto has been nominated for the Nobel Prize in Economics 
several times, and was a finalist for the award in 2002. 
 
¶10. (U) Some of the other prizes and honors de Soto has 
 
received include:  the Freedom Prize (Switzerland), the 
Fisher Prize (UK), the Goldwater Award (USA), the Adam Smith 
Award of the Association of Private Enterprise Education 
(USA), the CARE Canada Award for Outstanding Development 
Thinking, the Templeton Freedom Prize (USA, 2004), a Royal 
Decoration from Thailand (2004), the Prize of Deutsche 
Stiftung Eigentum for exceptional contributions to the theory 
of property rights (Germany, 2004), the IPAE Award from the 
Peruvian Institute of Business Administration (2004), the 
Academy of Achievement's Golden Plate Award (USA, 2005), an 
Honorary Ph.D. from the University of Buckingham (UK, 2005), 
the Americas Award (USA, 2005), the BearingPoint/Forbes 
magazine's Compass Award for Strategic Direction (2005), and 
the Bradley Foundation's Bradley Prize for outstanding 
achievement (2006).  He was also named the 2003 Downey Fellow 
at Yale University, inducted into the Democracy Hall of Fame 
International at the National Graduate University, and named 
a "Fellow of the Class of 1930" by Dartmouth College. 
STRUBLE 

=======================CABLE ENDS============================