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### Viewing cable 08LIMA1552, IMPOVERISHED APURIMAC REGION: ON BRINK OF MINING

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
08LIMA1552 | 2008-09-22 15:03 | 2011-02-25 12:00 | CONFIDENTIAL | Embassy Lima

`

    VZCZCXYZ0007
    PP RUEHWEB

    DE RUEHPE #1552/01 2661503
    ZNY CCCCC ZZH
    P 221503Z SEP 08
    FM AMEMBASSY LIMA
    TO RUEHC/SECSTATE WASHDC PRIORITY 9358
    INFO RUEHAC/AMEMBASSY ASUNCION PRIORITY 2028
    RUEHBO/AMEMBASSY BOGOTA PRIORITY 5996
    RUEHBR/AMEMBASSY BRASILIA PRIORITY 7933
    RUEHBU/AMEMBASSY BUENOS AIRES PRIORITY 3470
    RUEHCV/AMEMBASSY CARACAS PRIORITY 1224
    RUEHLP/AMEMBASSY LA PAZ SEP 4978
    RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 9578
    RUEHQT/AMEMBASSY QUITO PRIORITY 2071
    RUEHSG/AMEMBASSY SANTIAGO PRIORITY 2003
    RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY
    RUMIAAA/USCINCSO MIAMI FL PRIORITY

` `

    C O N F I D E N T I A L LIMA 001552

    SIPDIS

    E.O. 12958: DECL: 09/23/2018
    TAGS: PGOV SNAR EMIN PREL PINR PE
    SUBJECT: IMPOVERISHED APURIMAC REGION: ON BRINK OF MINING
    BOOM?

    REF: A. LIMA 3075
         ¶B. LIMA 3217

    Classified By: Amb. P ...

    id: 170946
    date: 9/22/2008 15:03
    refid: 08LIMA1552
    origin: Embassy Lima
    classification: CONFIDENTIAL
    destination: 08LIMA3075|08LIMA3217
    header:
    VZCZCXYZ0007
    PP RUEHWEB

    DE RUEHPE #1552/01 2661503
    ZNY CCCCC ZZH
    P 221503Z SEP 08
    FM AMEMBASSY LIMA
    TO RUEHC/SECSTATE WASHDC PRIORITY 9358
    INFO RUEHAC/AMEMBASSY ASUNCION PRIORITY 2028
    RUEHBO/AMEMBASSY BOGOTA PRIORITY 5996
    RUEHBR/AMEMBASSY BRASILIA PRIORITY 7933
    RUEHBU/AMEMBASSY BUENOS AIRES PRIORITY 3470
    RUEHCV/AMEMBASSY CARACAS PRIORITY 1224
    RUEHLP/AMEMBASSY LA PAZ SEP 4978
    RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 9578
    RUEHQT/AMEMBASSY QUITO PRIORITY 2071
    RUEHSG/AMEMBASSY SANTIAGO PRIORITY 2003
    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 001552

    SIPDIS

    E.O. 12958: DECL: 09/23/2018
    TAGS: PGOV SNAR EMIN PREL PINR PE
    SUBJECT: IMPOVERISHED APURIMAC REGION: ON BRINK OF MINING
    BOOM?

    REF: A. LIMA 3075
         ¶B. LIMA 3217

    Classified By: Amb. P Michael McKinley for reasons 1.4b and d.

    ¶1.  (C) Summary: Apurimac ranks as Peru's second most
    impoverished region and is best known to the outside world
    for its periodic political turbulence.  Two mega-mining
    projects could transform this predominantly agricultural
    region with massive, multi-billion dollar investments.  The
    prospect of these investments in poor communities has raised
    concerns about socio-economic "distortions" and future social
    conflicts like those seen in other mining areas in Peru.
    Regional opposition leaders have sought to stoke and exploit
    these tensions to build support for future elections.
    Apurimac also suffers from the presence from armed groups --
    allegedly Shining Path -- linked to narcotraffickers that
    transit the region en route from the Apurimac and Ene River
    Valley (VRAE) coca-production zone. End Summary.

    Impoverished, Politically Turbulent Region
    ------------------------------------------
    ¶2.  (SBU) Apurimac has an official poverty rate of about
    69.5% and ranks as Peru's second most impoverished region
    after nearby Huancavelica.  The region lacks significant
    mining revenues and as a result receives one of the smallest
    investment budgets per capita of any Peruvian region -- $130
    million for a population of just over 400,000 people.  (By
    contrast, Tacna Region receives twice as much per capita for
    investment thanks to plentiful mining revenues.)  Apurimac's
    woeful infrastructure reflects its poverty and isolation: the
    region's two main cities, Abancay and Apurimac, are connected
    by a rutted, dirt road that requires half a day to navigate
    and features dangerous hairpin curves that overlook drops of
    thousands of feet.  Along the way, one passes through
    isolated villages with almost no basic services.

    ¶3.  (SBU) Apurimac is perhaps best known by the outside world
    for the "Andahuaylazo" rebellion launched in January 2005 by
    Antauro Humala, brother of opposition leader Ollanta Humala.
    In the event, Antauro and some 160 of his followers captured
    the police station in Andahuaylas and called for
    then-President Alejandro Toledo to resign.  Six died in
    ensuing clashes before the rebels surrendered.  Apurimac
    returned to national and international headlines in December
    2006 when 4,000 protestors in the regional capital Abancay
    demanded the Regional President's resignation for favoring
    Andahuaylas in an ongoing intra-city dispute over resources.
    Police quelled the protests but left over 80 injured.
    Apurimac residents have participated vigorously in various
    national and local protests since 2006.  The region voted
    overwhelmingly for Ollanta Humala over Alan Garcia -- about
    74% to 26% -- in the second round of the 2006 presidential
    election.

    On the Cusp of a Mining Boom
    ----------------------------
    ¶4.  (U) Apurimac has two mega-mining projects currently under
    development that could have a dramatic impact on this
    predominantly agrarian region.  The Las Bambas copper
    project, operated by the Swiss company Xstrata Copper, is
    located on remote land in southeastern Apurimac, far from
    major population centers.  Xstrata executives told Emboffs
    that the project is in the exploration phase and that they
    expect to earn some $200 million in revenue per year once
    they begin production in 2010 or 2011.  The second project,
    controlled by the consortium Apurimac Ferrum, would focus on
    mining Andahuaylas province's vast iron ore deposits.
    Although the consortium is just beginning to develop
    community relations and has not yet begun exploration, local
    leaders expect investors to pour in $2.4 billion and
    construct a railroad to the coast to ship the metals.

    Looming Social Conflicts Near Mining Sites
    ------------------------------------------
    ¶5.  (C) While the mining projects would bring sorely needed
    resources to region, the prospect of massive investments in
    impoverished communities is causing fear among some locals of
    socioeconomic distortions -- such as village displacement,
    environmental degredation, an influx of outsiders, and an
    increase in alcohol consumption and prostitution -- and

    threatens to provoke social conflicts like those seen in
    other parts of Peru (Refs A & B).  The Mayor of Andahuaylas
    told Poloff that Apurimac Ferrum representatives launched its
    dialogue with local communities poorly, causing local leaders
    to dig in their heals.  The mayor emphasized the conflictive
    nature of the local populace and said the company now has
    extra groundwork to do before the communities will allow them
    to do business.  Xstrata, by contrast, has handled community
    relations effectively, according to a cross-section of local
    observers, with early and frequent communication with
    affected populations.  A mining industry expert at the NGO
    Oxfam, which is often critical of international mining
    operations in Peru, cited Xstrata's work in Apurimac as an
    example of positive community outreach.

    Opposition Leaders Exploit Tensions
    -----------------------------------
    ¶6.  (C) Regional opposition leaders have sought to stoke and
    exploit social tensions in Apurimac in the hopes of building
    support for future elections.  Soon after the 2006 regional
    elections, key opposition figure and former Union for Peru
    (UPP) Congressman Michel Martinez launched a campaign to
    recall Regional President David Salazar.  Although the recall
    campaign ultimately failed, one of Salazar's advisors told
    Poloff it distracted Salazar from focusing on his job for
    nearly a year.  (Note: Recall campaigns and other opposition
    attacks have weakened Regional Presidents and localQeaders
    across Peru. End Note.)  Several peasant leaders and Martinez
    followers in Andahuaylas told Poloff that the Mayor and
    Regional President had abandoned the poor, and they
    threatened to launch new protests in coming weeks.  Other
    observers noted that Nelson Palomino -- a prominent
    coca-grower leader that reportedly coordinates with Martinez
    and other leftist leaders around Peru -- has appeared
    recently in Apurimac to deliver anti-mining speeches and
    organize peasants.  (Note: Michel Martinez is infamous for
    having invited Ollanta Humala in 2006 to run for President
    under the UPP banner after Humala's own party failed to
    qualify.  Martinez reportedly expected tQgain a Vice
    Presidential nomination in return, but Humala instead blocked
    him entirely from running for office.  Martinez now describes
    Humala as a danger to Peru. End Note.)

    Presence of Armed Groups
    ------------------------
    ¶7.  (C) Apurimac also suffers from the presence from armed
    groups -- allegedly Shining Path -- linked by most observers
    to narcotraffickers who transit the region en route from the
    VRAE coca-production zone.  Several officials said that
    locals regularly spot small armed groups of two to five
    fighters circulating in Andahuaylas province.  The Mayor of
    one small town told Poloff that a group of Shining Path came
    to his town to seek a meeting, but thankfully he (the mayor)
    was traveling.  The town's police chief said that the Shining
    Path no longer uses force to terrorize and recruit locals,
    but instead relies on persuasion.  Another political leader
    in Andahuaylas said that he had observed a group of 32 armed
    fighters based near the border with Ayacucho region that
    locals told him had plans "to seize power".  He did not know
    who they were or who financed them.
    MCKINLEY

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