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C O N F I D E N T I A L LIMA 000215 
 
SIPDIS 
 
E.O. 12958: DECL: 2020/02/26 
TAGS: PGOV KJUS KCRM EFIN SOCI MCAP PE
SUBJECT: PRESIDENT ENDS DISCORD OVER SECURITY FORCES' COMPENSATION 
 
CLASSIFIED BY: McKinley P.Michael, Ambassador, U.S. Department of 
State, Executive; REASON: 1.4(B), (D) 
 
¶1. (C)  Summary:  Compensation for GOP security forces has always 
been sensitive issue, given their key role in maintaining public 
security in a country where potential conflicts abound and state 
presence is lacking.  After several weeks of bitter political 
wrangling within his administration and party, President Alan 
Garcia announced on February 20 that his government would provide a 
one-time bonus and a small permanent pay raise to lower ranking 
members of the police and military. These compromise measures seem 
to have defused most of the internal government strife without 
busting the public budget.  The debate to address longer term 
issues such as professionalization and structural reform, however, 
has been postponed.  End Summary. 
 
 
 
¶2. (SBU)  Congress passed legislation earlier this year that would 
have given bonuses to some 225,000 active duty and retired police 
officers and members of the armed forces. The legislation called on 
the Administration to use funds that had gone unspent in the 2009 
budget. The legislation provoked a vitriolic debate within the 
Cabinet, openly pitting Vice President Luis Giampetri against most 
of the rest of the cabinet, but President Garcia decided to back 
Economy and Finance (MEF) Minister Mercedes Araoz and vetoed the 
bill. Congress then voted to override the President's veto, 
sparking a nasty fight within the Executive Branch and the ruling 
APRA Party.  Congress's Permanent Committee -- which functions when 
the Legislature is in recess - voted to override the veto, setting 
up a possible confrontation when Congress returns March 1. 
 
 
 
¶3.  (C)  In public and in private, Government Ministers and 
APRA-party leaders pointedly attacked VP Giampetri, a retired 
admiral who favors generous pay for security forces and at one 
point implied he might quit the government over the dispute. 
Giampetri publicly stated that he had requested a meeting with 
President Garcia to discuss the issue but had been rebuffed so far. 
Foreign Minister Garcia Belaunde, asserted that Giampietri was 
"acting like a member of the opposition" and Social and Women's 
Minister Vilchez called him a "traitor."  Garcia later tried to 
downplay the attacks against Giampietri, but most observers believe 
he is in disfavor with the President. 
 
 
 
¶4. (SBU)  Aware that the full Congress would likely also vote to 
override the veto and that the original legislation would cause it 
major problems, the Administration opted to seize the initiative. 
It proposed a compromise providing a bonus of 1,000 soles (about 
$357) for some 150,000 persons including mid- and low-ranking 
members of the police (46,000) and soldiers (90,000), as well as 
the families of police officers and soldiers killed in the line of 
duty. Unlike the bonus approved by Congress, the Administration's 
proposal does not provide payments to senior officers or retirees, 
except for wounded  or disabled veterans. 
 
 
 
¶5. (SBU)  Garcia also announced a monthly wage increase of one 
hundred soles (about $36) for active duty military and police 
personnel and pensioners. (Giampetri earlier said this amount 
"wouldn't pay the electric bill".)  The raise is slated to be 
implemented in two stages, with fifty soles added to pay checks 
starting in March, and the other fifty soles paid as of July.  In 
total, the government will shell out around $140 million for the 
bonus and the raise.  According to MINDEF Rafael Rey, the money 
will not come out of 2009 unused budget funds, but rather from 
planned infrastructure projects.  (Rey clarified that funding for 
the GOP's counter-guerilla operations in the VRAE would not be 
touched.)  President Garcia also set up a special commission to 
look into the salary issue and come up with a proposal for a new 
wage scale within 180 days. 
 
 
 
¶6. (SBU)  Acrimonious public debate was also building in the weeks 
preceding Garcia's announcement, including the threat of an April 5 
 
strike by Peruvian National Police (PNP).  Three policemen were 
arrested for political agitation in relation to the planned 
protest.  Many believe that police have raw feelings in the 
aftermath of the June 5, 2009 violence in Bagua that left 24 of 
their members dead. Retired PNP Director General Eduardo Perez was 
quoted as saying that, "In the last government, the Judicial Branch 
receive a 300% salary increase, Education 100%, while the Armed 
Forces  and PNP only 10%, with the argument that they suffer from 
corruption." Retirees are also reportedly unhappy that their 
pensions and health benefits are inadequate. 
 
 
 
¶7.  (C)  Comment:  Compensation for security forces is a sensitive 
and potentially explosive political issue.  Given their key role in 
maintaining public security in a country where potential social 
conflicts abound and state presence is lacking, the morale, will 
and capability of security forces can mark the difference between 
order maintained and a situation spinning out of control.  For the 
time being at least, the President's announcement appears to have 
appeased the key stakeholders while eschewing the populist easy out 
and passing forward major and unsustainable budget burdens to 
future governments.  At the same time, as one prominent critic 
observed, the deeper challenges of security forces in the context 
of Peru's still brittle democracy - structural reform, 
professionalization, rooting out corruption - remain unaddressed. 
Moving proactively on this front will be a central component of the 
country's continuing democratic consolidation.  End Comment. 
McKinley