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S E C R E T STATE 034680 
 
 
NOFORN 
 
E.O. 12958: DECL: 04/06/2029 
TAGS: OVIP HILLARY CLINTON PREL PTER SNAR ECON
KSUM, PE 
SUBJECT: (U) SECRETARY CLINTON'S APRIL 6 MEETING WITH 
PERUVIAN FOREIGN MINISTER GARCIA BELAUNDE 
 
CLASSIFIED BY ASSISTANT SECRETARY OF STATE THOMAS A. 
SHANNON FOR E.O. 12958, REASONS 1.4 (b) AND (d). 
 
¶1. (U) APRIL 6, 02:30 PM - 03:00 PM 
 
¶2. (U) PARTICIPANTS: 
 
UNITED STATES 
The Secretary 
WHA A/S Thomas Shannon 
PA Spokesperson Robert Wood 
S Staff 
Dorothy Ngutter (WHA notetaker) 
 
PERU 
Foreign Minister Jose Antonio Garcia Belaunde 
Ambassador Luis Valdivieso (Appointed) 
DCM Manuel Talavera 
Javier Sanchez Checa, Deputy Political Counselor 
 
------- 
SUMMARY 
------- 
 
¶3. (S) Summary: In her first meeting with Peruvian 
Foreign Minister Garcia Belaunde, the Secretary laid out 
USG thinking on the upcoming Summit of the Americas, and 
noted the new Administration would seek to set a new 
tone for hemispheric relations and will focus on issues 
that will have a positive impact on the lives of 
citizens in the Hemisphere.  The Secretary offered to 
work with the GOP to support poverty reduction efforts 
as well as the fight against narcotics trafficking, and 
to promote stability in the region.  FM Garcia Belaunde 
suggested the United States consider an increase of 
capital for the Inter-American Development Bank (IDB) 
targeted to help the most vulnerable Latin American 
economies.  He advised that the announcement of a change 
in U.S. policy on Cuba might be most effective during or 
after the summit.  Garcia Belaunde also asked for a 
clear message from the United States in support of Peru 
as a politically and economically stable partner in the 
region.  Garcia Belaunde confirmed that President Garcia 
will participate in the Summit.  End summary. 
 
--------------------------------------------- ------- 
Summit of the Americas and U.S.-Hemisphere Relations 
--------------------------------------------- ------- 
 
¶4. (C) The Secretary said the Obama Administration 
intended to set a new tone for hemispheric relations. 
She said the United States would like the upcoming 
Summit of the Americas to focus on social inclusion, 
energy, and environment, adding that there is much work 
to do together.  The Secretary noted that some countries 
apparently seek to focus the upcoming Summit on Cuba. 
The Administration is looking at changing specific 
aspects of our Cuba policy, such as remittances and 
travel restrictions.  The Secretary emphasized that it 
will be important not to let the summit get diverted 
from its main agenda. 
 
¶5. (C) Garcia Belaunde agreed with the Secretary that 
poverty reduction, environmental issues, and social 
inclusion should be the summit's main focus.  That said, 
he highlighted the economic crisis as the critical issue 
needing attention.  For many years, Garcia Belaunde 
observed, Latin American countries have sought access to 
U.S. markets.  He noted those countries that desire free 
trade agreements have them (Chile, Peru, CAFTA 
countries) or are working towards them (Colombia, 
Panama).  However, there are other countries that oppose 
FTAs for ideological reasons.  With this in mind, it 
might be helpful for the United States to talk about 
special financing provisions for the least developed 
countries in the region instead of focusing on free 
trade.  The foreign minister suggested an announcement 
of replenishment of capital for Inter-American 
Development Bank (IDB) would be especially helpful to 
the most vulnerable countries.  He observed the G-20 
meeting seemed to focus on remedies for Eastern Europe, 
and there was concern that Latin America may be left 
out. 
 
¶6. (C) Regarding the summit, Garcia Belaunde said he 
recently read an article stating that the Obama 
Administration would announce a Cuba policy before 
Trinidad.  To do so, he stated, would be a mistake, as 
it would appear that the United States had not listened 
to regional perspectives.  Moreover, an early 
announcement would open the issue to criticism/debate at 
the summit, since whatever policies are announced could 
well fall short of some people's expectations.  Garcia 
Belaunde specifically noted that President Garcia, who 
is normally very reluctant to attend such gatherings, 
will participate in the Summit of the Americas. 
 
---------------------------------------- 
Social Cooperation and Poverty Reduction 
---------------------------------------- 
 
¶7. (C) The foreign minister inquired about the future of 
the Millennium Challenge Corporation program, as the 
program has been a good vehicle to address broader 
social issues.  He added that Peru had some expectations 
regarding the MCC program.  Secretary Clinton offered to 
continue working with Peru to ensure that economic 
benefits reached its most vulnerable citizens.  She 
noted that successful implementation of the ongoing 
Threshold program would help Peru meet indicators 
necessary for consideration for an MCC Compact.  The 
Secretary also noted USG assistance through Development 
Assistance funds and Child Survival and Health funds 
will continue to support Peruvian efforts to address 
social issues. 
 
¶8. (C) The foreign minister remarked that the Garcia 
Administration had in fact reduced poverty from about 46 
percent (when he took office) to 36 percent.  President 
Garcia had set a goal of reducing poverty to 30 percent 
by 2011.  Garcia Belaunde noted that strong growth over 
a seven-year period had helped with poverty reduction. 
However, he added, "there are no better social programs 
than a good job." 
 
-------------------- 
Security Cooperation 
-------------------- 
 
¶9. (C) Turning to security issues, the Secretary 
underscored USG commitment to working with Peru to 
counter narcotics trafficking and other transnational 
crime.  She noted that Sendero Luminoso seems to 
continue to present a challenge.  With $37 million in 
assistance (FY09) funds, she said, we hope to be as 
effective as possible in helping Peru address security 
issues.  The Secretary asked for feedback, as the U.S. 
goal is to help Peru succeed against Sendero Luminoso 
and other security threats. 
 
¶10. (C) Garcia Belaunde remarked that Sendero Luminoso 
has been reduced to remnants that are more closely 
linked to narcotics trafficking.  He emphasized that 
Sendero was small, existed only in isolated areas, and 
presented a limited threat today.  With Mexican cartels 
operating in Peru and the informal mining sector being 
used to launder money, the foreign minister underscored 
the security challenge is not just about drugs; it is 
much more complicated.  Noting successes in northern 
Peru on alternative development, Garcia Belaunde 
suggested a broader, more comprehensive approach to 
addressing narcotics trafficking and organized crime. 
Finally, the foreign minister said Peru and Colombia 
enjoy a cooperative security relationship, aimed at 
preventing the use of the border areas for trafficking 
or by the FARC. 
 
---------------------------- 
Promoting Regional Stability 
---------------------------- 
 
¶11. (S/NF) The Secretary asked the foreign minister for 
his advice on influencing regional leaders and 
preventing destabilizing actions.  Garcia Belaunde said 
that Bolivia, Ecuador, and Venezuela were all different 
cases.  Ecuador, he noted, has the weakest economy, 
lacks fiscal flexibility because it is dollarized, and 
has been battered by decreasing exports and remittances. 
He stated that Ecuadorian President Correa had kept his 
distance from Chavez, adding that he is a well-educated 
man, but "a very sensitive person." 
 
¶12. (S/NF) Garcia Belaunde said Bolivian President 
Morales is very dependent on Venezuela and President 
Chavez, observing that he is not very sophisticated. 
Admitting that Peru has had problems with Morales, he 
advised approaching him through President Lula.  Chavez, 
Garcia Belaunde remarked, is not what he used to be. 
Chavez is now poorer and less aggressive and Garcia 
Belaunde suggested that the summit might provide an 
opportunity to approach Chavez.  "I have known Chavez 
for some years now; you can deal with him," he stated. 
(Nicaraguan President) "Ortega, on the other hand, is a 
lost cause," the foreign minister declared. 
 
--------------------- 
A Message of Support 
--------------------- 
 
¶13. (C) Garcia Belaunde pointed to excellent U.S.-Peru 
relations.  The foreign minister emphasized that Peru 
needs a message from the USG.  A clear message that Peru 
is a politically and economically stable country with a 
sound FTA would be a good message for private investors 
and others to hear.  Ambassador Valdivieso added that 
Peru's problem is not one of financing, but of 
confidence.  He gave the example of the exclusion of 
Peru from the Federal Reserve's short facility, which 
other countries had received (South Korea, Mexico). 
Peru instead was advised to seek IMF facilities that 
carry conditionalities.  Access for Peru to the Reserve 
facility, Valdivieso argued, would be a positive signal 
of Peru's economic and political stability. The 
Secretary offered to raise the idea of graduating Peru 
to enable access to facilities with the Federal Reserve. 
She also noted that the G-20 also had discussed removing 
conditionality and the stigma it carries. 
 
¶14. (C) Garcia Belaunde thanked the Secretary for the 
United States' strong leadership and offered Peru's help 
in addressing regional issues.  He mentioned that he 
understood the Secretary may be visiting South America 
soon and noted Peru would be delighted to have her 
visit.  The Secretary thanked the foreign minister for 
his offer and said, while a trip had yet to be planned, 
she would consider a stop in Peru. 
 
 
CLINTON