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Reference ID Created Released Classification Origin
05LIMA3429 2005-08-09 18:06 2010-12-12 21:09 CONFIDENTIAL Embassy Lima
This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 03 LIMA 003429 



E.O. 12958: DECL: 08/03/2015 

Classified By: Ambassador Curtis Struble for Reason 1.4 (B, D) 

1. (C) Mr. Secretary, both my country team and the Peruvian 
Government are delighted that you are able to visit Peru. 
Within hours of learning that you would be stopping in Lima, 
President Toledo called me to say how important your visit is 
to him. The President has recently become concerned about 
the erosion of his security capabilities. He recognizes that 
Peruvian and U.S. national security interests in South 
America are closely aligned, and that his military needs both 
our example (a capable security force subject to strict 
control by elected governments) and our help. 

2. (C) The Peruvian military is a troubled institution that, 
to borrow a clich, won a war but lost the peace. In the 
early 1990s, the military played a role at least equal to 
that of the police in defeating the Sendero Luminoso 
terrorist group -- a conflict that cost an estimated 60,000 
lives. On the heels of that victory, however, the top 
military leadership engaged in an orgy of corruption as the 
Armed Forces "updated" their weapons systems. The most 
controversial procurement was the purchase of clapped-out and 
overpriced MIG-29 and SU-27 aircraft from Belarus. The 
military also lost public support over its alliance with 
Fujimori,s scheming and manipulative intelligence chief, 
Vladimiro Montesinos, and was further marginalized by 
allegations of human rights abuses during the struggle 
against terrorism. After President Fujimori resigned in 
October 2000 to be replaced by an opposition-led interim 
government, over 30 flag-rank officers were indicted for 
corruption or abuse of power. 

3. (C) These scandals made the Toledo Administration 
determined to clip the Armed Forces, wings. During his 
first three years in office, President Toledo viewed his 
military largely from a political rather than security 
perspective. He reapportioned some 25 percent of the 
military budget to social spending, purged senior officers 
who had been overly intimate with the discredited Fujimori 
regime, and ended the unpopular draft. Last January,s armed 
uprising in provincial Andahuaylas by "Ethnocaceristas" (a 
small but violent and racist group that models itself on 
Hitler,s brownshirts) brought home to the President that he 
had sapped the military,s ability to defend the state. The 
Army had to use the Presidential jet to get more troops on 
the ground because all of its own transport aircraft were 

4. (C) We estimate that 85 percent of the Armed Forces budget 
in 2004 was spent on salaries, food and utilities. Training, 
maintenance and readiness all have steeply eroded. Although 
Defense Minister Chiabra believes in keeping the current 
voluntary service, about 30 percent of Army billets are 
unfilled because of the inability to pay competitive wages, 
even though forces have been downsized by 25 percent from 
2001 levels. Concern that things have gone too far led the 
Toledo Administration last year to establish a special 
defense fund financed by state mining and hydrocarbon 
royalties. This will effectively bump up the military budget 
by about four percent, but the real importance to the 
services is that it provides an alternative to having 
virtually no maintenance and acquisition funds. 

5. (C) The Armed Forces have made some steps towards reform. 
Enhanced civilian control is reflected in the Congress's work 
on updating mission priorities, i.e., conflict scenarios, 
deployment of forces, national defense interests, dealing 
with contraband, and pacification of social conflicts. 
Additional legislation is needed to promote standardization, 
civilian hiring, and in an area key to U.S. interests, the 
capability to interact effectively on programming with 
foreign military services. The Defense Ministry published a 
"White Book" on national security this year, which although 
criticized by some as mainly a collection of statistics, does 
provide a context for defining Peru's future military needs. 
Another encouraging, outward-looking trend is Peru's 
deployment of troops for Haiti peacekeeping, its first 
participation in a PKO in 30 years. 

6. (C) Overall, our military relationship with Peru is better 
than at any time over the last four decades. The Velasco 
dictatorship,s decision in the 60's to buy Soviet created 
problems that have consequences to this day: adherence to 
outdated Soviet doctrine; atrophying of the logistics, 
training and exchange relationships with the U.S.; an 
antiquated and unreliable stock of Soviet equipment. The 
situation is now ripe, however, for a new and strong 
relationship with U.S. Both the Peruvian Armed Forces and 
Toledo Administration share our view of threats to the 
region, particularly narco-terrorist ties in Colombia and 
within Peru. GOP cooperation with the GOC is the best in the 
region -- Peru has deployed patrol and support units along 
the Putumayo River, and cooperates closely with the 
Colombians on operations. Peruvians are convinced that they 
have a stake in President Uribe,s successful campaign 
against the FARC. The President and the Defense Minister 
have called for more regional cooperation against drugs and 
terrorism and are concerned as well that the rump armed 
Sendero Luminoso faction (some 250-500 combatants) may be 

7. (C) We have moved in recent years toward relations with 
Peru built on a broad communality of interests. We are close 
to signing an agreement for enhancing Peru's counterdrug 
participation through the Cooperating Nation Information 
Exchange System (CNIES). Despite Article 98 restrictions, we 
have cooperation programs that include 1033 assistance, 
provision of C-26 aircraft for counterdrug missions, and navy 
sub participation in USG training exercises. We also expect 
to carry out a New Horizons civic/humanitarian exercise 
(NH-06) here next year with extensive GOP involvement. 
Completing NH-06 will constitute an important turn-around. A 
New Horizons exercise was spiked here in 2002 due to 
allegations by a left-leaning Congressman (spun up wildly in 
the media) that we were attempting to establish a military 
base in the coca zone. When these charges were further 
complicated by the failure of the then-Foreign Minister to 
defend the exercise (despite prior consultations), we were 
forced to stand down. NH-06 is being planned in a coastal 
department governed by a leftist leader who is friendly both 
to the U.S and to our military, and who is highly respected 
by the local populace. Both he and we have carried out 
extensive preparations and outreach designed to ensure that 
NH-06 will be a winner. 

8. (C) Even with these advances, Peru's failure to enter into 
an Article 98 agreement has restricted our engagement on 
defense issues. We are discussing with the Foreign Ministry 
proposals aimed at providing the protections we require 
through an exchange of diplomatic notes that would "develop" 
provisions that already exist in our 1952 Bilateral Military 
Assistance Agreement. This would avoid the necessity of 
submitting a separate Article 98 agreement to the Peruvian 
Congress, where passage would be difficult at best. This 
approach has given us some negotiating momentum, but we ask 
your help in stressing the importance of an Article 98 
agreement in contacts with President Toledo. 

9. (C) Your trip gives us a chance to highlight and build on 
our politico-military agenda here. We expect Toledo and 
Defense Minister Chiabra to tell you of their concerns over 
the narco-terrorist link. In describing Peru,s cooperation 
with Colombia, they likely will lament that in their view the 
GOP does not receive the USG recognition and aid this merits. 
They are liable to express interest in continuing and/or 
expanding the PKO in Haiti. In addition to any global issues 
you may wish to raise, we suggest you address the following 
points in your meetings here: 

For President Toledo: 

-- Congratulations on the legacy you are leaving Peru of 
responsible economic management, growth, and reform. 

-- GOP defense of democracy and its stand against 
transnational crime and terrorism show strong and 
forward-looking leadership. A good example is Peruvian 
insistence, during its mediation of Colombia-Venezuela crisis 
following the capture of FARC "Foreign Minister" Granda, that 
the GOV recognize its obligations to fight terrorism. 

-- The GOP has understood better than anyone else in the 
region that the FARC, ELN, and paramilitaries in Colombia are 
a threat to the region and not just to Colombia; Peruvian 
cooperation with the GOC is the best in South America. 

-- Western Hemisphere security is not threatened by 
neighboring countries but by criminals and terrorists who 
exploit weakness of government institutions or the vacuum of 
authority in ungoverned spaces. 

-- We have increased our assistance and cooperative programs 
during your Presidency to deal with these threats. The lack 
of an Article 98 agreement has been an impediment. We are 
making headway towards a solution and urge more effort, but 
we are seizing opportunities for cooperation where they exist. 

-- Congratulations on the performance of Peruvian forces in 
the Haiti PKO. 

For Defense Minister Chiabra: 

-- Congratulations on the performance of Peruvian forces in 
the Haiti PKO. I understand reimbursements from the UN have 
been slow. We are willing to use USG good offices with UN. 

-- We are impressed by level of your cooperation with 
Colombia. Peru "gets-it" -- understand that the FARC, ELN 
and paramilitaries are a threat to the region, not just to 
the GOC. 

-- (Assuming CNIES signed) Congratulations on CNIES and 
integration into the regional air information exchange 
network. We are prepared to send an assessment team to work 
on identifying priorities for bilateral investments in 
improving control of air space. 

-- We are making headway in talks with the Foreign Ministry 
regarding International Criminal Court jurisdiction. It 
would be useful for you to let Foreign Ministry know how 
important this issue is for mil-mil cooperation. 

-- I understand you are concerned about signs that Sendero 
Luminoso is rebuilding. What is your assessment? How will 
you counter this?