Press conference by President of the Government and President of Republic of Peru

President of the Government.- Ladies and gentlemen, a very good day to you all.

It is an honour for me to appear here before you together with President Humala within the framework of this State visit. This is his third visit to Spain, if you include his attendance at the Ibero-American Summit in Cadiz in 2012. His first visit took place in January of the same year and I remember he was the first Latin American president I received as President of the Government. From that moment on, dialogue between us has been very fluid, our understanding mutual and productive, and our friendship real, as we have just observed.

In January 2013, I had the privilege of visiting Lima, an occasion on which we both signed up to the renewal of the Strategic Association Plan, which is a true reflection of the level of our bilateral relations in all areas: political, economic-trade, migratory, cultural and development cooperation. Peru and Spain got back to working together at last.

Now, with this visit, we close off a year in which Spain has hosted State visits from the four founding members of the Pacific Alliance, an organisation of which Spain was the first Observer State from the European Union and through which we seek to strengthen our involvement, since this is a reality of great dynamics and global projection, and an economic and political vision with a great future. The last summit of the Pacific Alliance was held last week in the Peruvian city of Paracas and President Humala gave me a brief summary of the progress made there.

During our talks today, we have reviewed the internal situation in our respective countries. That gave me the opportunity to congratulate him on the achievements of his economic administration, as well as in reducing poverty and inequality. Peru is making progress, and Spain lives and feels this progress.

We also spoke about our shared future, about the priorities of our bilateral relations, both political and economic-trade relations, as well as in other areas, such as development cooperation and on defence issues.

Spain's business presence in Peru has diversified and consolidated over the last five years. Today, Spain is the leading foreign investor in Peru. There are almost 400 Spanish companies operating there and they intend to stay and continue investing in Peru, which offers a stable environment that respects legal certainty; in other words, it generates confidence. I would like to highlight that in recent times a growing number of small- and medium-sized Spanish enterprises have started to set up operations in Peru, which is very good news for both countries.

We also shored up our future plans in a Joint Declaration that we signed, together with various sector agreement, including on matters of diplomatic cooperation, cyber-security, police cooperation and the fight against drug trafficking. We will pass these texts on to you and I would invite you to read them as evidence of this progress in relations between our two nations.

We also tackled Peru's relations with the European Union, of which Spain has been and will always be a staunch proponent. Significant steps has been taken in this term of office and I want to point out a couple of them: on the one hand, in March 2013 the Multiparty Peru-European Union Treaty came into force; and on the other hand, in June 2015, during the European Union-CLACS Summit, the Treaty to exempt visa requirements for Peruvian and Colombian citizens was endorsed, which will be signed and will come into force before the end of the year. As you are all aware, Spain put all its weight behind this agreement and it will give me both personal and professional satisfaction to see this become a reality.

In terms of international politics, there are few more satisfactory achievements than those that can be tangibly felt by individuals. Removing short-term visa requirements throughout the European Union is something that affects the real lives of Peruvian citizens in Spain and in Europe.

In the same way as we support Peru in its relations with the European Union, we will also continue to do this in its aspirations to become, in the not too distant future, a member of the OECD. Peru can count on both Spain and on me personally in achieving this goal.

We also spoke about various issues on the regional agenda in Latin America and on the international agenda, such as the fight against Jihadi terrorism, and the fight against climate change. You are aware that not long ago a conference was held in Lima on this very issue.

In short, and I trust that President Humala will agree with me, this has been a most beneficial meeting at which we have seen our excellent political harmony, as well as the extensive network of relations that bind our two countries.

Thank you, President Humala, for this visit. Know that your government, Peru and the people of Peru, will continue to receive the loyal collaboration of my government and the friendship and admiration of the Spanish people. Thank you very much.

Mr. Humala.- I would like to comment to the President of the Spanish Government, Mariano Rajoy, and to all those present here today, that this is a State visit, the first made since 2004, in which all the efforts being made on both sides, by Spain and by Peru, have come together to allow us to strengthen our bilateral relations here today; historic relations, maintained through historic ties and shared values, such as the defence of democracy, the rule of law, strict respect for human rights, freedom of expression, in which we all believe and value, transparency in free trade an area which, moreover, Spain and Peru aspire to be strategic partners, both in terms of Spanish investment in Latin America, and Peruvian investment in the European Union.

We acknowledge, value and appreciate Spain's efforts as a strategic partner of Peru, which has enabled us to sign up to the Multiparty Treaty with the European Union and the visa exemption requirements, which Mariano Rajoy has already referred to. This helps give greater quality to our trade and also facilitates the free movement of people.

Furthermore, I want to point out that we are very grateful for the warm welcome we have received both yesterday and today here, in Spain. We have visited a series of institutions, and as Mariano Rajoy has already said, we have signed a series of agreements ranging from such issues as security and migration to cultural issues, thus allowing us to diversify our bilateral relations, not only in a cultural area, or an economic-trade area, but also in other additional areas. In the field of education, we must acknowledge Spain's efforts to enable us to reach agreements and for students under the National Grant System of Peru to come to Spain: at present there are more than 500 young Peruvians taking university courses here.

Moreover, we thank the Spanish Government for its predisposition to work together in seeking a binding agreement on the fight against climate change and we hope to reach a position of consensus together at the COP 21, to be held later this year in Paris.

On another note, we have highlighted and reviewed, as already expressed by Mariano Rajoy, issues on the international stage, both in terms of concerns and challenges facing the European Union, and in the challenges facing Peru in Latin America.

I would like to welcome the efforts being made by the Spanish Government in terms of maintaining active this space that consists of the Ibero-American Summits. This allows us to also maintain constant, permanent relations between the whole of Latin America and Spain and Portugal.

Moreover, I also want to point out that Peru currently holds the pro tempore Presidency of the Pacific Alliance, in which Spain is one of the leading protagonists and one of the first countries to hold the status of an Observer State. We have discussed all the opportunities that this Pacific Alliance offers us.

So, Mariano Rajoy, thank you very much for your hospitality, I would also thank the King and Queen of Spain for their attention, and I believe that we have reached a point in time whereby we can activate mechanisms to move our bilateral relations to an even higher level. Thank you very much.

Q.- A question for President Ollanta Humala. Along general lines, Mr President, how would you describe this important visit here, to the Kingdom of Spain? You have held meetings with King Felipe, and now with the President of the Spanish Government, above all on education-related issues, where there is a considerable amount of interest in Peru through the "Beca 18" programme. There are a significant number of grant students both here in Spain and in other European countries.

And one question for President of the Government Rajoy. How do you view our country from here in Europe? Particularly in terms of making investments there? Certain issues have been particularly well viewed here, such as raw materials, but is its level of industrialisation taken into account, which is one of the steps on the path to development?

Mr. Humala.- I believe that relations with Spain have never been better. That doesn't mean I wish to discredit previous governments but rather this is the result of the efforts made by previous governments that have enabled our relations to continue their upward curve.

Reaching a level of strategic association and strengthening this association by adding on a new layer is a challenge because it involves issues of shared embassies and consulates on a reciprocal basis; and it involves the challenge of recognising qualifications and professional studies, both for Peruvian citizens in Spain and vice versa.

We have acknowledged and observed the significant presence of leading Spanish companies in Peru that have implemented major, strategic projects in the country; we have also acknowledged and observed the increase in the flow of Spanish citizens visiting Peru, not only for tourism but also for work reasons. This thus implies that we should also highlight the joint effort being made to resolve their problems, and also acknowledge that one of the few countries with which Peru has dual nationality agreements in force is with Spain. That is an example of the sound ties that exist in this relationship.

I also believe it is important to point out the social policy of the country through the strategy entitled "Include to grow", which we have talked about with President of the Government Rajoy and which, together with economic growth, are the two instruments that presently allow Peru to be one of the countries heading up growth in Latin America; and also highlight that whilst Latin America is not reducing its average level of poverty, Peru is reducing poverty and continuing to maintain its efforts to expand through public investment. So much so, that in all the following major projects, such as Line 2 of the Metro system and a stretch of Line 4, the modernisation of the refinery in Talara, the modernisation of the refinery in La Pampilla, the construction of the Sub-Peruvian gas pipeline, the consolidation of the highway network in the so-called La Longitudinal de la Sierra, or the modernisation of ports such as San Martín, in Pisco; Spanish companies are taking part and making investments.

I also want to highlight today that as well as leading Spanish companies, there are also approximately 300 Spanish SMEs working in Peru, and many of them are operating in consortiums with Peruvian companies. Moreover, one interesting aspect is that not all of them are working in Lima, the capital of Peru; many have found important markets in the interior regions of the country.

I wish to stress that we are making progress in closing the inequality gap and also in offering opportunities to the different regions of the country, so that they can establish markets that are offering foreign investment opportunities and the presence of foreign companies. What we always demand is that all of this brings a transfer of technology, that we take on the challenge, as we have spoken about, of training our young people in order to have a better-qualified labour force and to become more competitive. Let us not forget that the true competition in today's markets is not from customs tariffs but from the quality of our work.

President of the Government.- You ask me how Spain views Peru. I will answer you exactly how I feel; as a serious country, that generates confidence and where there is legal certainty; as a country with wonderful macroeconomic figures, which are essential for microeconomic policy to truly reach all citizens; we see it as a country which is going to grow more than double the average of Latin America as a whole this year; a country that has trade agreements with the European Union; a country that forms part of an association - the Pacific Alliance - which Spain has asked to join, and which we have indeed joined as an Observer State at an important point in time; and a very important country for Spain: we are the leading foreign trade investor in Peru with 400 Spanish companies operating there, as I said before. At present, many SMEs are going there as well, precisely because of the level of legal certainty and the confidence in the country, which has learned how to gain credibility.

There is another important issue that you also mentioned in your question, which is the issue of education. This is a key issue. We are heading towards - in reality we are already there - a more open, more global, more competitive world, and there you compete, fundamentally, with knowledge and a good level of training. That is also a fundamental challenge in Spain. There is much talk at present of inequality and poverty; the greatest enemy of inequality and poverty is job creation, and job creation requires people with the best possible level of training.

I believe that that is how I see things. It is a country on the rise and, quite frankly, we are very pleased that that is the case.

Q.- This question is for President of the Government Rajoy. Today Greece has formally asked for its third bailout but, if this proposal does not meet the requirements of the Eurogroup and of the European Union, what does the alternative plan consist of for Greece to exit the Euro?

Also, what would the consequences for Spain be?

President of the Government.- Indeed, today, following the meeting the Eurogroup held yesterday and the meeting we had of the Heads of State and Government - representing all the countries in the Eurozone - Greece has taken a step forward, as it promised to yesterday.

Greece has today asked the President of the ESM, and the President of the ESM has informed the various Ministers for the Economy, at least the Spanish Minister for Economic Affairs, regarding the three-year programme it has requested. It has undertaken to start to make reforms as from Monday - that is what the letter says - and it has undertaken, and this is very important, to follow the rules and procedures. This is key, because you cannot have an institution like the Euro that does not operate through rules and procedures, or whereby each country does what it wishes and sees as opportune. It has also declared, and this is also very important, its intention to settle its payments, which is pure common sense. And finally, it has announced that tomorrow, on 9 July, it will present the ESM with its agenda of reforms and will speak about reforms on tax issues, pensions, etc.

This tune we are hearing now is different to the tune we had been hearing to date, and this is positive; the lyrics to the tune will be heard tomorrow, on Thursday. I hope that things turn out well. Greece has lost a lot of time over these last few months. Just look, not long ago the growth forecast for Greece was 2.9% for this year but now it is suffering negative growth; in other words, Greece has gone into recession again. Just look, not long ago it was announced that the Greek debt was sustainable whereas now the International Monetary Fund says it is not. Just look, above all - and this is the most important thing - at how the people of Greece are living at the moment; they cannot even go to the bank to take their savings out; they are not allowed more than 60 euros a day.

Hence, this situation of uncertainty must be resolved right now, for those Europeans that live in Greece, for the Greek Government and also for the European Union as a whole.

What will happen if the content is not agreed in the way the European institutions want? That is something that we will decide upon this weekend. On Saturday, there will be a meeting of the Eurogroup, unless things change, and on Sunday, also unless things change, there will be a meeting of the Heads of State and Government. But, as was conveyed yesterday, this must be resolved now, hopefully for the best and not for the worst.

What are the consequences for Spain? Well, this affects Spain and it affects the rest of the countries of the European Union. In fact, as you will have been able to see, there have been events, fortunately not too worrying to date, both in the markets - the risk premium has risen - and also in the stock markets, which have fallen in the last few days. But, in short, it is not something too concerning just yet, because we are paying the 10-year bond at two and a bit percent, while you will remember that back in 2012 we were paying it at seven and a bit.

Hence, there are some effects; it is clear that this has had some effects, but we would have been affected far more if we had not undertaken all the reforms that have been implemented since 2012. If we had been in the situation in which Spain was in three years ago then we would be talking about something quite different now.

So, as I have said on several occasions, whatever happens, the Euro will continue and, whatever happens, Spain will remain an important player in the Euro.

Q.- Presidents, one of the issues you have been dealing with for some time now is the issue of the exemption of the Schengen visa requirements for Peruvian citizens. We know that Spain is the country that presented the proposal to the European Union and which has helped push the issue through. As you can imagine, President of the Government Rajoy, in Peru there are great expectations as a result of this and we wanted to know when the administrative processes will be concluded, when the corresponding technical examination will be made and when the Schengen visa requirement exemption will finally come into force.

Finally, as regards the issue of the agreements signed today, I wanted to know whether the two Presidents can tell us a little more about the content of these agreements. Yesterday, President Humala commented at a meeting with business leaders that the issue has been raised of implementing a double tax treaty between Peru and Spain. I was wondering whether you could give us a little more information on this issue and on the agreements signed today.

President of the Government.- As regards the visa issue, I remember that back in August 2013, two years ago, I called President Humala - I was on holiday back in my native Galicia - and I said to him that I was going to set this issue in motion. Just look, almost two years have passed since then; how complicated some things are. But this process is now irreversible. This has been endorsed at a meeting that took place between the European Union and all the countries of Latin America a short time ago in Brussels, and I believe that before the end of the year the process will be definitively concluded.

I believe that this is a process that responds to common sense. You cannot have the free movement of goods without the free movement of people; it would be somewhat at loggerheads. Peru has trade agreements with the European Union, it forms part of the Pacific Alliance and, as I said before, it is a serious country, which has won the respect of one and all. Hence, this is very positive and everyone in the European Union has supported Peru, including in Parliament.

We spoke about a double tax treaty, but we did not go into detail because, of course, it wasn't a question of going into all the technical issues. We would like to reach an understanding, President Humala also intends to do this and we have agreed for talks to continue at a technical level and see if the two of us are able to give this a political boost. But we didn't go into detail.

Mr. Humala.- I would add something to what President of the Government Rajoy stated in the sense that out of all the agreements signed, one of them appears particularly interesting; they are all interesting but I would highlight the issue I pointed out of sharing embassies and consulates. That seems important to me. We are already doing this within the area of the Pacific Alliance and I understand that within the European Union these good practices are also being implemented, not only because it is a cost saving, but also because it sends out a message of integration and unity.

Another of the agreements worthy of mention is the issue of the relationship between the Cervantes Institute and the Guarnan Poma de Ayala Institute, through the Ministry for Foreign Affairs. This is important because it is the chroniclers and the men of letters who have not only made Spain and Peru shine but also the Spanish language - Castilian Spanish.

In terms of the issue of double taxation, I will simply mention that there are good intentions and a predisposition, both on the part of the Government of Spain and of the Government of Peru, to find a way forward through dialogue. We know that this is an issue that contains many technical arguments and it is precisely in that area that we must work. It will be a challenge to make progress on these issues within what is the process of integration. We trust that this will be worked on at a technical level to reach an agreement that is mutually interesting.

Q.- President of the Government Rajoy, I wanted to return to the issue of Greece and to the aspects of the political repercussions on Spain. The leader of Podemos has linked the events in Greece in last Sunday's referendum with the start of the change - his words - of what could happen in Spain, coinciding with the approach that you have adopted in the last few days of a strong attack and a strategy of spreading a little fear regarding what could happen in Spain if Podemos were to ally with the PSOE in the upcoming general elections. You have even spoken about the possibility of being "penned in" in Spain in six months if the economic policies applied by this government are changed. Do you truly believe that this option exists in Spain?

And if you will allow me, Mr President of the Government, taking into account that an important Political Conference of your People's Party starts on Friday, the party has also clarified in recent days that there will be talks about everything, and you yourself have said that you will talk about everything; but we have been told that what is not appropriate is to talk at a Political Conference of this nature about the issue of the primaries, which are very fashionable these days and which are being called for by your party. Does that mean that you discard any type of new internal procedures in the People's Party for the elections that you have scheduled for the 22 or 29 November this year?

President of the Government.- I see you are very well informed. Later you can tell me who your source is.

It is true that primaries are fashionable, because all parties have held primaries but no more than one candidate has chosen to stand, isn't that right? I suppose I can't see any other reason for you saying that they are fashionable.

At this Convention we are going to talk about whatever people want to talk about, although, I repeat, it is not a Convention where we are going to take decisions, because the decisions will be outlined later in the electoral programme, which we will start to draw up immediately after the Convention. There are various speakers. I seem to remember that this list has not yet been presented to the media, and I believe that the discussions are open to all subjects. But just the other day I announced the priorities for the next term of office: the first priority is job creation; the second is consolidating social policies in our country; the third, we are concerned by Jihadi terrorism and the problems of immigration since they affect everyone; being more effective in the fight against corruption, and then, Europe. These are the issues on which we must work hard and do battle, as we are seeing.

In terms of the political consequences and as to what may happen in Spain, I can only say to you that when we came to power we weren't far off needing a bailout, or to put it another way, we were on the point of being bailed out and on the verge of bankruptcy but now, fortunately, we are in a much better situation. We will be the country to grow the most in the European Union this year.

I am not going to go into whether it is good or bad to have a coalition between the PSOE and Podemos, the only thing I can say is what I said before: five months ago Greece was forecast to grow by almost 3% this year whereas now it is suffering from negative growth. Something has happened there. Five or six months ago the International Monetary Fund said that the Greek debt was sustainable and yet six months later it is unsustainable; something has happened there. There is now talk about being "penned in". Five or six months ago there was not talk about being "penned in"; now there is; something has happened there.

What is happening? Normally demagoguery collides with reality. It is easy to talk and easy to make promises but governing is a little more complicated than speaking, and taking decisions is not pleasant and is not amusing, but it is one of the obligations of a governor that has a value. It is easy to do nothing but, in the end, this only leads in one direction; it is prejudicial to your compatriots, and at the same time, resolves nothing.

Hence, a good governor must take decisions, must be brave and must undertake reforms. What Greece needs, a country which has enjoyed and will continue to enjoy European solidarity, is to grow and create jobs. That is what Greece needs and to achieve that it needs to undertake reforms, something we are all aware of. Those countries that undertake reforms, those countries that open up to the world, are the countries which, in the end, enjoy more growth and where people, fortunately for all of them, can live better.

So, we are not going to look at what might happen in Spain, but, of course, what I do believe in is that the reformist policy we have chosen to adopt has worked and that it would be foolish to turn our backs on this now. When I see that the PSOE wants to change everything we have opted to do in recent years with the support of Podemos, I truly think and believe that this is bad for Spain and very bad for the Spanish people.

Thank you very much.