Cablegate: Bio for Gop Special Trade Envoy Hernando de Soto..

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TAGS: TBIO ETRD ECON PGOV PE
SUBJECT: BIO FOR GOP SPECIAL TRADE ENVOY HERNANDO DE SOTO...

id: 76367
date: 8/28/2006 13:03
refid: 06LIMA3396
origin: Embassy Lima
classification: CONFIDENTIAL
destination: 06LIMA3283|06LIMA3385
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E.O. 12958: DECL: 08/24/2016
TAGS: TBIO ETRD ECON PGOV PE
SUBJECT: BIO FOR GOP SPECIAL TRADE ENVOY HERNANDO DE SOTO

REF: A. LIMA 3283 B. LIMA 3385

Classified By: Ambassador J. Curtis Struble, Reasons 1.4 (b) and (d)

1. (U) Following is biographic information for Hernando de
Soto, whom President Garcia on August 17 named as his
"personal representative" to obtain the U.S. Congress'
ratification of the U.S.-Peru Trade Promotion Agreement
(PTPA), as per REF A. De Soto is also charged with
developing the necessary internal reforms to allow as many
Peruvians as possible the opportunity to benefit from the
agreement. See REF B for analysis of De Soto's new role.

2. (U) Hernando DE SOTO Polar was born in Arequipa, Peru, on
June 2, 1941. When De Soto was five years old, his father (a
lawyer) was exiled from Peru following a military coup and
moved to Geneva to work for the International Labor
Organization (ILO). De Soto grew up and was educated in
Europe, mainly in Switzerland, but spent his summers in Peru
because his father wanted his boys to keep their Latin
American culture. He did his post-graduate work at the
Graduate Institute of International Studies (HEI) in Geneva,
and then served as an economist for the General Agreement on
Tariffs and Trade (GATT, predecessor to the WTO), as
President of the Executive Committee of the Copper Exporting
Countries Organization (CIPEC), as managing director of
Universal Engineering Corporation (Continental Europe's
largest consulting engineering firm), and as a principal of
the Swiss Bank Corporation Consultant Group. De Soto also
financed projects in hydroelectric and nuclear power plants
worldwide.

3. (U) In 1979, after a successful business career in Europe,
De Soto returned to a Peru plagued by poverty and years of
military rule. He did some work in the mining business,
served as Governor of Peru's Central Reserve Bank, and became
President Alberto Fujimori's personal representative and
principal advisor in 1990. Some credit De Soto for changing
Fujimori's economic policies from a Keynesian to a neoliberal
approach, and convincing Fujimori that he had to abide by the
rules set by the international financial institutions. These
policies were responsible for the stabilization of Peru's
economy and the taming of inflation, thereby allowing Peru to
return to international financial markets. De Soto resigned
from the GOP two months before Fujimori's self-coup in April
1992, reportedly due to differences with Fujimori's infamous
de-facto National Security Advisor, Vladimir Montesinos.

FROM THE SHINING PATH TO "THE OTHER PATH"...
--------------------------------------------

4. (U) De Soto is best-known for his continuing efforts to
answer the question "why are some countries rich and some
poor?" He founded the non-profit Institute for Liberty and
Democracy (ILD) in 1980, and between 1988 and 1995, De Soto
and ILD were responsible for some 400 initiatives, laws, and
regulations aimed at modernizing Peru's economic system. In
particular, ILD designed and ran the reform of Peru's
property system which gave land titles to more than 1.2
million families and helped some 300,000 firms transition
from the informal to the formal economy. This latter task
was accomplished through the reduction of red tape and
restrictive registration, licensing and permit laws that made
the opening of new businesses excessively time-consuming and
far more costly than most of the largely poor population of
Peru could afford. De Soto also conceived Fujimori's
counternarcotics strategy, one of the earliest efforts to
combat drug trafficking by reducing coca farmers' dependence
on the drug crop. De Soto and his admirers claim that these
reforms played a major role in the decline of the Marxist
Shining Path terrorist group, because, by granting titles to
small coca farmers in the two main coca-growing areas, he
deprived the Shining Path of safe haven, recruits and money.
The Shining Path attempted to kill De Soto at least three
times.

5. (U) De Soto's work attracted international attention, and
some 30 heads of state have invited him to carry out programs
in their countries (including Mexico, El Salvador, Egypt, the
Philippines, Haiti, Tanzania, Russia, Ghana, and Indonesia).
His admirers have included Ronald Reagan, Bill Clinton,
Vladimir Putin, Hamid Karzai, the World Bank, and The
Economist. Currently, de Soto and ILD are focused on
designing and implementing capital formation programs to
empower the poor in Africa, Asia, Latin America, the Middle
East, and former Soviet Nations. De Soto is also a
commissioner of the ILO's World Commission on the Social
Dimension of Globalization.

6. (U) De Soto has published two international best-sellers
thus far which propose granting more access to financing to
micro-enterprises in emerging markets, "The Other Path"
(1989) and "The Mystery of Capital: Why Capitalism Triumphs
in the West and Fails Everywhere Else" (2000). These books
argue that people in developing countries lack an integrated
formal property system, leading to only informal ownership of
land and goods. The lack of an integrated system of property
rights makes it impossible for the poor to leverage their
informal ownerships into capital (as collateral for credit),
which De Soto claims would form the basis for
entrepreneurship and poverty reduction. His books include
blueprints for economic reform in the third world which focus
on streamlining government, reducing red tape, and harnessing
the strengths of the extended informal economies.

POLITICAL ASPIRATIONS
---------------------

7. (C) De Soto also has sometimes revealed political
aspirations. In January 2001, he announced the formation of
his own political movement, Popular Capital, and attempted to
join the presidential race. However, he was unable to
collect the necessary signatures in time to register for the
April 2001 elections and his movement quickly faded. Upon
learning of De Soto's inability to register, Alan Garcia
publicy offered de Soto the president slot on a De
Soto-Garcia APRA (Garcia's party) ticket. De Soto told the
Ambassador that APRA leaders formalized that offer, but that
he declined because he would have been a figurehead president
susceptible to the whims of disciplined APRA congressmen. De
Soto told the Ambassador that before he accepted his current
role, President Garcia had offered him the Prime Minister
position. De Soto said he turned it down because he had
invested years of effort building his and ILD's reputation,
and he wanted to expend that capital wisely and not be held
accountable for the APRA government's policies. He accepted
his "president's personal representative" role because it
allows him to avoid formal membership in the Garcia
Administration while furthering ILD's objectives of bringing
smaller businesses into the formal Peruvian economy so they
can benefit from liberalized trade.

8. (U) De Soto is single (divorced) and speaks English
fluently. His brother, Alvaro, is a career diplomat who has
spent the last 24 years at the UN. Alvaro has held the rank
of Under-Secretary-General at the UN since 1999, and has been
the Secretary-General's Special Coordinator for the Middle
East Peace Process and his Personal Representative to the
Palestinian Liberation Organization and Palestinian Authority
since May 2005.

AWARDS/RECOGNITION
------------------

9. (U) In 1999, Time magazine chose Hernando de Soto as one
of the five leading Latin American innovators of the 20th
century, and in 2004, the magazine included him among the 100
most influential people in the world. De Soto was also
listed as one of 15 innovators "who will reinvent your
future" according to Forbes magazine's 85th anniversary
edition. He was awarded the Milton Friedman Prize for
Advancing Liberty in 2004, and in 2005, the readers of
Prospect magazine (UK) and Foreign Policy (USA) ranked him
among the top 13 "public intellectuals" in the world. De
Soto has been nominated for the Nobel Prize in Economics
several times, and was a finalist for the award in 2002.

10. (U) Some of the other prizes and honors de Soto has

received include: the Freedom Prize (Switzerland), the
Fisher Prize (UK), the Goldwater Award (USA), the Adam Smith
Award of the Association of Private Enterprise Education
(USA), the CARE Canada Award for Outstanding Development
Thinking, the Templeton Freedom Prize (USA, 2004), a Royal
Decoration from Thailand (2004), the Prize of Deutsche
Stiftung Eigentum for exceptional contributions to the theory
of property rights (Germany, 2004), the IPAE Award from the
Peruvian Institute of Business Administration (2004), the
Academy of Achievement's Golden Plate Award (USA, 2005), an
Honorary Ph.D. from the University of Buckingham (UK, 2005),
the Americas Award (USA, 2005), the BearingPoint/Forbes
magazine's Compass Award for Strategic Direction (2005), and
the Bradley Foundation's Bradley Prize for outstanding
achievement (2006). He was also named the 2003 Downey Fellow
at Yale University, inducted into the Democracy Hall of Fame
International at the National Graduate University, and named
a "Fellow of the Class of 1930" by Dartmouth College.
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