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C O N F I D E N T I A L LIMA 001107 
 
SIPDIS 
 
E.O. 12958: DECL: 06/27/2018 
TAGS:PGOV, PREL, PINR, PE 
SUBJECT: OLLANTA HUMALA CLAIMS HE CAN SAVE PERU FROM 
EXTREMISTS 
 
REF: LIMA 1081 
 
Classified By: Amb. P Michael McKinley for reasons 1.b an...
id: 159839
date: 6/26/2008 21:33
refid: 08LIMA1107
origin: Embassy Lima
classification: CONFIDENTIAL
destination: 08LIMA1081
header:
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DE RUEHPE #1107/01 1782133
ZNY CCCCC ZZH
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INFO RUEHAC/AMEMBASSY ASUNCION PRIORITY 1998
RUEHBO/AMEMBASSY BOGOTA PRIORITY 5825
RUEHBR/AMEMBASSY BRASILIA PRIORITY 7889
RUEHBU/AMEMBASSY BUENOS AIRES PRIORITY 3412
RUEHCV/AMEMBASSY CARACAS PRIORITY 1184
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RUEHSG/AMEMBASSY SANTIAGO PRIORITY 1933
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY
RUMIAAA/USCINCSO MIAMI FL PRIORITY


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

C O N F I D E N T I A L LIMA 001107 

SIPDIS 

E.O. 12958: DECL: 06/27/2018 
TAGS:PGOV, PREL, PINR, PE 
SUBJECT: OLLANTA HUMALA CLAIMS HE CAN SAVE PERU FROM 
EXTREMISTS 

REF: LIMA 1081 

Classified By: Amb. P Michael McKinley for reasons 1.b and d. 

¶1. (C) Summary: Ambassador McKinley met with opposition 
Peruvian Nationalist Party (PNP) leader Ollanta Humala and 
his wife (and advisor) Nadine Heredia June 18 for a cordial 
two-hour discussion.  Humala argued that the Garcia 
government is neglecting Peru's mounting social concerns and 
needs to find pragmatic solutions to prevent the spread of 
conflict.  He said the recent protests in Moquegua over the 
allocation of mining royalties (canon) broke out after the 
government first ignored the problem and then lost control. 
Humala called for "pragmatic" solutions to mounting social 
conflicts in the mining sector and proposed to increase taxes 
on mining profits and to improve mining canon distribution 
among regions.  Asked about the possible impact on juridical 
security and investment, Ollanta said companies have no 
security if social conflicts can shut down production. 
Humala claimed to favor free trade but lamented the irony 
that the US Congress had done more to protect Peru's labor 
and environmental norms in the FTA framework than had Peru's 
own Congress.  Turning to constitutional reform, Ollanta said 
the 1993 Constitution was illegitimate and called for the 
return of the 1979 Constitution.  Ambassador McKinley closed 
the conversation by addressing Humala's concerns about the 
New Horizons military-humanitarian mission currently in 
progress in Ayacucho.  On June 25th, the Ambassador saw 
Humala again at a diplomatic function, and Humala endorsed 
the Ambassador's upcoming trip to Ayacucho to explain New 
Horizons to a skeptical audience, although he made clear that 
he stuck to his concerns.  End Summary. 

Cordial Atmospherics 
-------------------- 
¶2. (C) Ambassador McKinley received opposition Peruvian 
Nationalist Party (PNP) leader Ollanta Humala and his wife 
Nadine Heredia at his residence on June 18th for a cordial 
and broad-ranging two-hour conversation.  Ollanta sat relaxed 
and attentive throughout, making his points in a calm, 
non-confrontational tone.  Nadine -- the PNP's Secretary for 
International Relations and effectively Ollanta's "Chief of 
Staff" and principal political advisor -- sat on the edge of 
her seat with a serious and guarded facial expression at 
first, intermittently joining the discussion to clarify 
Ollanta's comments.  She let down her guard and warmed as the 
discussion drew to a close. 

Humala: I Can Save Peru From Radicalism 
--------------------------------------- 
¶3. (C) Humala argued throughout the conversation that Alan 
Garcia's government is neglecting Peru's mounting social 
concerns and that, absent pragmatic solutions, regional 
conflicts like the recent violent protests in Moquegua region 
would spread.  Ollanta expressed concern about this prospect 
and warned that dangerous, anti-systemic radicals could 
ultimately threaten the stability of the state.  Declaring 
himself "a nationalist, not a leftist", Humala said that he 
represents the pragmatic change that Peru needs.  (Comment: 
Humala did not mention credible reports that he often seeks 
to stir up, for political gain, the very social conflict he 
told us he wants to prevent.  End Comment.) 

Conflict in Moquegua Region 
--------------------------- 
¶4. (C) Humala cited the recent conflict in Moquegua over 
regional mining canon allocations to underscore his general 
thesis on the government's neglect of social problems. 
Moquegua's leadership, he said, had repeatedly presented 
their complaints to the government during the previous year 
but received no response.  The government finally paid 
attention after the first week of protests when roadblocks 
began to cause shortages in neighboring Tacna region.  He 
warned that Moquegua's elected leaders had lost credibility 
with the local populace because of their inability to win 
concessions from Lima, leading to the emergence of more 
radical "informal" leaders.  This complicated negotiating a 
definitive end to the conflict because it was unclear with 
whom the GOP could successfully negotiate, creating a messy 
situation that could replicate itself in other regions. 
(Note: The GOP eventually resolved the Moquegua conflict by 

offering concessions to the protestors.  End Note) 

Raise Mining Profit Taxes 
------------------------- 
¶5. (C) Humala said the best way to avert conflict was to 
increase mandatory profit sharing (utilidades) by mining 
companies that are making bundles right now with mineral 
prices sky high and to spread the benefits of the windfall 
widely -- to workers, communities, the regions and the whole 
country.  Recent congressional negotiations on a bill that 
would raise the cap on mining profits taken by mine workers 
did not resolve the underlying structural problem, he said. 
It rewarded only a narrow band of full-time formal mining 
workers, not the majority subcontracted workers and others, 
and therefore exacerbated the differences between them. 
Moreover, in rewarding full-time mining employees, it took 
money away from the regions.  Mining companies agreed with 
this solution because they care narrowly about their own 
workers, he said, but the government needed to concern itself 
with the broader interests of all.  In this sense, the 
government would need to mediate among the competing 
interests of the workers, the mining regions, and the 
Peruvian people, which he repeated would require raising the 
profit taxes on these companies.  (Comment: In this and other 
instances, Humala cast himself in the role of impartial 
statesman rather than rabble-rousing opposition leader.  End 
Comment.) 

Juridical Security, Foreign Investment, Free Trade 
--------------------------------------------- ----- 
¶6. (C) The Ambassador responded to Ollanta's mining sector 
proposals by emphasizing the importance of juridical security 
to attract foreign investment.  Humala acknowledged the 
importance of juridical security and foreign investment, and 
raised the example of the Melia Hotel chain in Cuba.  He said 
he once asked the chain's Cuba manager why they had so many 
hotels on the island, and the manager responded that they 
felt safe because they knew that Cuba's laws never change. 
(Note: We shared a laugh at the irony.  End Note.)  Humala 
then argued that companies in Peru today only enjoy juridical 
security on paper.  What good are legal norms if social 
conflicts halt production?  He insisted that if the 
government followed his model, juridical security would in 
fact be more sustainable. 

¶7. (C) Ambassador McKinley raised the importance of free 
trade to Peru's future.  Countries throughout the world are 
competing for investment and markets in a process that cannot 
be stopped and that far transcends commercial relations 
between Peru and the U.S., he said.  Peru can either stand 
aside and watch or jump in and benefit.  Arguing that he is 
not a leftist, Humala accepted the importance of trade but 
said it more important that it be "equitable" than free.  As 
far as the bilateral free trade agreement went, he said that 
Peru would never be able compete with the U.S. in a host of 
areas and feared that Peru's potential to develop critical 
national industries would be undermined as a result.  Both 
agreed to disagree on this issue.  Humala continued by 
pointing out that FTA conventions on labor and the 
environment, which were generally positive, had been inserted 
thanks to pressure by the US Congress.  It was ironic, he 
noted, that the U.S. congress had done more to represent the 
interests of Peruvian workers and the environment in this 
case than had Peru's own congress or government. 

Constitutional Reform 
--------------------- 
¶8. (C) Turning to constitutional reform -- a topic recently 
debated in Congress (Ref A) -- Ollanta claimed that the 1993 
Constitution lacked legitimacy because it was written by 
Fujimori-era criminals and approved in a referendum marked by 
fraud.  Humala said the piecemeal reforms proposed and 
rejected in Congress last week will not suffice and that his 
party proposed returning to the 1979 Constitution.  He said 
he was calling for a referendum on the 1979 Constitution 
because the public supports such a change, and observed that 
the debate over the constitution had caused serious fractures 
in Congress and within the ruling APRA party itself.  Humala 
said he will continue pushing the issue and accused the 
President of reneging on his campaign promise to return to 
the 1979 document.  (Note: According the recent polls, fewer 

than 20% of Peruvians favor a return to the 1979 
Constitution.  End Note.) 

New Horizons 
------------ 
¶9. (C) The Ambassador and Humala closed with an in depth 
discussion of the New Horizons bilateral 
military-humanitarian mission currently underway in Ayacucho 
region.  (Note: The Humala-funded La Primera newpaper and 
several PNP Congresspeople have been harshly critical of the 
project and have accused the USG of planning to establish a 
military base to replace the Manta FOL.  End Note)  The 
Ambassador explained that the three-month mission would has 
primarily humanitarian goals -- performing surgeries, 
building schools, digging wells -- and that at the end, US 
troops will all return home.  He emphasized that it was a 
bilateral exercise, that everything had been closely 
coordinated with and vetted by the GOP, and that the Peruvian 
military and police had lead responsibility for force 
protection and security.  Contrary to some inflammatory media 
reports, he said, US weapons were being warehoused under lock 
and key. 

¶10. (C) Humala then asked a series of pointed questions about 
the exercise: Why did participating doctors and engineers 
have to be uniformed military rather than civilians?  The 
Ambassador responded that the mission was also intended to 
support the training of Peruvian and U.S. military personnel 
to deal with natural and other disasters, a capability which 
other organizations lacked.  Why was the mission located on 
the edge of a narcotics-producing region in a sensitive zone 
of historical conflict -- and what would the US do if an 
American soldier or a Peruvian civilian was accidentally 
injured or killed?  The Ambassador responded that we believed 
in the Peruvian government's ability to provide security and 
were working carefully to ensure the safety of Americans and 
Peruvians alike.  Humala then noted the imminent closing of 
the Manta FOL in Ecuador (claiming that President Correa had 
told him the decision was definitive), and asked about U.S. 
intentions to establish a successor to Manta somewhere in 
Peru.  Citing historical examples, the Ambassador noted that 
the potential closing of the Manta FOL does not mean we 
necessarily must open a new base in some other country, and 
reiterated that the U.S. has no intention to establish a base 
in Peru. 

Comment: A Positive Meeting 
--------------------------- 
¶11. (C) Although we probably did not change Humala's opinions 
on the key issues, the dialogue was cordial and a level of 
trust was built.  In comments to the press while traveling in 
Ayacucho later that week that faithfully reflected the spirit 
and content of the exchange, Humala stated that, although 
there was reason for concern about New Horizons, the U.S. 
Ambassador had promised him that US troops were in Ayacucho 
temporarily and would return to the U.S. when the exercise 
ended.  Ambassador McKinley saw Humala again at a diplomatic 
function on June 25th, and in a friendly conversation Humala 
endorsed the Ambassador's upcoming trip to Ayacucho to 
explain New Horizons to a skeptical public.  Humala also 
mentioned that he had met and posed for photographs with an 
independent American missionary/medical team in the area. 
Humala added that one focus of protests in Ayacucho on July 
8th - 9th --part of a broader national strike -- would be the 
presence of US troops.  (Note: We have asked New Horizons to 
stand down on July 8-9 as a precaution.  End Note.) 
MCKINLEY 

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