VZCZCXYZ0018
PP RUEHWEB

DE RUEHPE #0884/01 0801210
ZNR UUUUU ZZH
P 211210Z MAR 07
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC PRIORITY 4528
INFO RUEHBO/AMEMBASSY BOGOTA PRIORITY 4470
RUEHBU/AMEMBASSY BUENOS AIRES PRIORITY 2828
RUEHCV/AMEMBASSY CARACAS PRIORITY 0234
RUEHLP/AMEMBASSY LA PAZ MAR 4120
RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 9135
RUEHQT/AMEMBASSY QUITO PRIORITY 1094
RUEHSG/AMEMBASSY SANTIAGO PRIORITY 1181
RUEHGL/AMCONSUL GUAYAQUIL PRIORITY 4383
RHMFIUU/CDR USSOUTHCOM MIAMI FL PRIORITY
RUEHC/DEPT OF LABOR WASHINGTON DC PRIORITY

UNCLAS LIMA 000884

SIPDIS

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: ELAB ETRD PGOV PHUM PE
SUBJECT: LABOR LEADERS SKEPTICAL ABOUT GARCIA, FTA, LABOR
LAW

REF: A. LIMA 33

     ¶B. LIMA 167
     ¶C. LIMA 667

¶1. (SBU) Summary: During a March 12 Embassy event, Peruvian
labor leaders claimed that President Garcia had betrayed the
trust of organized labor by reneging on key campaign
promises.  They were skeptical that the benefits of the Peru
Trade Promotion Agreement (PTPA) would "trickle down" to the
poor, and believed the General Labor Law did not adequately
protect worker rights.  Speaking about the government's
effort to defang the teacher's union (SUTEP), they said it
revealed an anti-union bias.  Comment: Many observers have
applauded Garcia's pro-growth policies, but labor's
skepticism about how wealth and benefits are distributed go
the heart of the challenges facing his government.  End
Comment and Summary.

¶2. (U) DCM Phyllis Powers hosted a reception for 21 labor
leaders as an informal follow up to Deputy USTR John
Vereneau's meetings with union officials, business leaders
and government representatives, including President Garcia
and Labor Minister Pinilla.  Participants included
representatives from Peru's three largest labor unions (CGTP,
CTP, and CUT), as well as smaller confederations representing
judicial workers, healthcare professionals and performing
artists.

Garcia Reneges on Promises
--------------------------

¶3. (U) Labor leaders criticized President Garcia for
betraying their trust by campaigning on a labor friendly
platform only to cater to business interests once assuming
office.  Specifically, they said Garcia had promised a return
to the 1979 Constitution, in which strong labor protections
such as the right to stable employment were enshrined, but
had done nothing to fulfill that promise since taking office.
 (Note: Even if the government wished to push for it, there
is little Congressional support to return to the 1979
document.  End Note.)  They also noted that Garcia had
pledged to reopen negotiations on the PTPA but had since
become a strong supporter of the agreement as is.  Finally,
they said the president had promised to push for a more
labor-friendly General Labor Law but had since (in their
view) taken the side of business on this sensitive issue.

Down with the FTA and the General Labor Law
-------------------------------------------

¶4. (U) Most labor representatives were sharply critical of
the PTPA.  Many openly doubted that the agreement's benefits
would "trickle down" to workers and believed instead that, by
favoring powerful producers over unprotected workers, it
would widen the gap between rich and poor.  The agricultural
workers union was particularly concerned the agreement would
open Peru to potentially devastating competition from U.S.
agricultural conglomerates.  Some leaders saw calls by U.S.
Congressional representatives to strengthen the labor
protections in the agreement as a ray of hope, and several
acknowledged that as long as the agreement remained
unfinished organized labor would maintain leverage to
negotiate its interests in the General Labor Law and
elsewhere.

¶5. (U) Many labor representatives also believed that the
General Labor Law, currently stuck in Congress's labor
committee (refs), failed adequately to protect workers'
rights.  Several characterized as unfair the widespread
criticism that organized labor sought only to represent the
small fraction of workers in Peru's formal sector, and said
they wished to expand labor protections for all workers.  In
this connection, they noted their interest in seeing the law
reduce or eliminate the practice of rampant subcontracting,
which resulted in a majority of workers in many sectors
enjoying few or none of the basic labor rights guaranteed to
full formal employees ("en planilla").  In their view, the
proposed law did not do this, did not guarantee sector-wide
organizing and did not provide protections for informal
workers, which is why labor protections in it needed to be
strengthened.

Breaking SUTEP Equals Anti-Union Bias
-------------------------------------

¶6. (U) Commenting on the GOP's (so far successful) attempt to
break the stranglehold of the Maoist national education union
(SUTEP) over the education system, several labor leaders said
they thought it reflected the government's anti-union bias.
Although few were sympathetic with the education union's
radical politics, many worried that the government may be
emboldened to take on other unions in the future.  In
response, they said, many unions were mounting membership
drives and information campaigns for their members.

Comment: Labor's Rejectionism Reflects Broader Challenge
--------------------------------------------- ----------

¶7.  (SBU) Embodying in some cases the entrenched views of an
anachronistic Latin American left, labor leaders were
predictably rejectionist in their views of Garcia's moderate
pro-growth policies and the benefits of the PTPA.  Where they
see campaign promises discarded, others see a president who
has learned (the hard way) the importance of economic
pragmatism -- the need for free trade, a labor law that
favors growth, and unions that seek to represent workers
rights and not radical and untenable political positions.
Still, labor's skepticism about how wealth and benefits are
distributed, and particularly how the underrepresented poor
and the working class will fare under the new rules, go to
the heart of the challenges facing the Garcia government.
STRUBLE