VZCZCXYZ0029
PP RUEHWEB

DE RUEHPE #0290/01 0312212
ZNR UUUUU ZZH
P 312212Z JAN 07
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC PRIORITY 3809
INFO RUEHAC/AMEMBASSY ASUNCION PRIORITY 1608
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UNCLAS LIMA 000290 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PE
SUBJECT: PERU: CRISIS WITH CHILE AVERTED 
 
REF: A. SANTIAGO 157 
 
     ¶B. LIMA 107 (AND PREVIOUS) 
 
¶1.  (SBU) Summary: Following passage of Chilean legislation 
that, in effect, altered the territorial boundaries between 
Chile and Peru, intensive behind-the-scenes diplomacy helped 
avert a bilateral crisis, according to MFA contacts. 
Government officials are satisfied with the Chilean 
Constitutional Tribunal ruling that the legislation was 
inconsistent with the 1929 Treaty, and Presidents Garcia and 
Bachelet have formally declared the matter closed.  The near 
miss underscores the precariousness of warming bilateral 
relations, which government officials have accused 
"ultra-nationalists" in Chile of seeking to undermne.  End 
Summary. 
 
¶2.  (SBU) Intensive diplomacy helped avert a crisis between 
Peru and Chile, according to Foreign Ministry contacts in the 
Souh America office.  The problem was rooted in Chilean 
legislation, approved in December, that sought to revise 
Chile's internal administrative borders but which, in effect, 
also altered established territorial and maritime boundaries 
between Chile and Peru.  That is, without reference to the 
bilateral Treaty of 1929, the legislation incorporated 
slivers of land-based Peruvian territory into Chile, and 
seemed to do the same with Peru's territorial waters.  MFA 
Chile desk officer told us the legislation violated the 1929 
Treaty, which establishes the precise location of territorial 
boundaries while leaving maritime borders undefined.  The 
legislation set off a volley of behind-the-scenes diplomatic 
activity, including a series of high-level meetings, Foreign 
Minister phone calls, at least two formal diplomatic notes, 
and a threat to recall Peru's Ambassador to Chile for 
consultations in Lima. 
 
¶3.  (SBU) The issue surfaced publicly when Peru's premier 
weekly news magazine (Caretas) reported mid-January that, 
owing to his discomfort with the Chilean legislation, 
President Garcia had refused President Bachelet's offer for a 
ride in the Chilean presidential airplane to and from 
President Correa's inauguration in Quito.  The dispute then 
climbed into the daily headlines and threatened to derail the 
positive bilateral momentum built up since the inauguration 
of President Garcia in July, 2006 (ref B). (Comment: The 
Chilean law mirrors, in its effects if not in form, 
legislation approved in Peru's former Congress in late 2005 
and ratified by then President Toledo, which set off a 
diplomatic scuffle that rattled bilateral relations.  End 
Comment.) 
 
¶4.  (SBU) Before becoming politically unmanageable, however, 
the crisis was nipped in the bud by a quick Chilean 
Constitutional Tribunal ruling stating that the legislation 
was inconsistent with the 1929 Treaty between Chile and Peru. 
 (Note: Some media outlets in Peru have credited Peruvian 
diplomatic pressure for the quick Chilean ruling.  End Note.) 
 Peruvian Government officials, including Foreign Minister 
Garcia Belaunde, expressed satisfaction with the Tribunal's 
ruling and hastened to pronounce the disagreement resolved. 
According to news reports, Presidents Garcia and Bachelet 
spoke by phone January 29, declared the matter formally 
closed, and pledged to meet soon to continue the construction 
of a more stable bilateral relationship. 
 
Comment: Near Miss 
------------------ 

¶5.  (SBU) The diplomatic near miss underscores the 
precariousness of Peru's warming relations with Chile, which 
both governments have made a central foreign policy priority. 
 The thrust of that policy has been for the two neighbors to 
pursue their manifest shared interest in strengthening 
economic, commercial, political and security ties while 
setting aside in separate "diplomatic" channels the thorny 
maritime boundary dispute that has plagued relations, 
blocking the prospect of improvement, in the past.  Foreign 
Ministry officials acknowledge that resolving that 
contentious issue, however difficult, would help set 
bilateral relations on a more permanent stable footing. 
 
¶6.  (SBU) If Chilean government officials explain the near 
crisis with reference to flawed internal government 
coordination (ref A), Peruvian officials have been quick to 
suspect something more sinister.  Prime Minister Jorge Del 
Castillo, for example, publicly accused "ultra-nationalists" 
in Chile of seeking to destabilize bilateral relations.  He 
might also have noted the acute opposition to the 
government's policy of rapprochement with Chile among 
influential circles in Peru. 
POWERS