VZCZCXYZ0000
OO RUEHWEB

DE RUEHBU #0499/01 1202110
ZNR UUUUU ZZH
O 302110Z APR 09
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3621
INFO RUCNMER/MERCOSUR COLLECTIVE
RUEHMD/AMEMBASSY MADRID 2248
RUEHRO/AMEMBASSY ROME 1511

UNCLAS BUENOS AIRES 000499 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PREL EAID ECON SOCI PHUM AR
SUBJECT: Argentina: International Donor Community 
Braces for Tough Times Ahead 
 
¶1. (SBU) Summary. The Ambassador hosted a roundtable 
coffee with the international donor community to 
discuss the impact of the global economic crisis on 
international assistance to Argentina.  The 
roundtable was co-organized with the Argentine 
Network for International Cooperation (RACI) and the 
Avina Foundation.  After the Ambassador's welcoming 
remarks, RACI gave a presentation on areas that 
receive the most development assistance in 
Argentina, noting that the international donor 
community tended to fund programs focused on the 
environment, economic development, education, good 
governance, and human rights, while local 
philanthropic organizations focused overwhelmingly 
on education, followed by culture and healthcare. 
RACI's remarks were followed by Avina's presentation 
on the lessons learned from Argentina's 2001-02 
crisis.  In the presentations and subsequent 
discussion with IDB and World Bank representatives, 
it was clear that the social support network in 
Argnetina would be overwhelmed if the economic 
crisis hit Argentina hard.  In closing, the 
Ambassador reiterated the USG's commitment to 
supporting Argentine society despite the current 
economic crisis and invited participants to attend 
the Embassy's second annual NGO Fair on April 30. 
End Summary. 
 
Participants 
------------ 
¶2. (SBU) On March 30, Ambassador Wayne hosted a 
roundtable coffee with the international donor 
community to discuss the impact of the global 
economic crisis on international assistance to 
Argentina.  It was the international donor 
community's third meeting in a series of quarterly 
roundtable breakfasts/coffees organized by the 
Argentine Network for International Cooperation 
(RACI) and the Avina Foundation.  Participants 
included the Ambassadors of Canada, the EU, Italy, 
New Zealand, the Netherlands, and Switzerland; 
representatives of the Embassies of Australia, 
Norway, Sweden, and the UK; as well as 
representatives from the World Bank (WB), the Inter- 
American Development Bank (IDB), the UN Development 
Program, the Japan International Cooperation Agency, 
and the Carolina Foundation. 
 
RACI: International Aid Focuses on Environment, 
Economic Development, Education, Good Governance and 
Human Rights 
--------------------------------------- 
 
¶3. (SBU) After the Ambassador's welcoming remarks, 
RACI Executive Director Guillermo Correa gave a 
presentation on RACI's analysis of the development 
assistance priorities of the international community 
versus local philanthropic organizations.  Since 
RACI was unable to ascertain exact funding amounts, 
it determined international donor priorities based 
on the number of donors supporting a given cause as 
opposed to total funding each cause receives.  Of 
the 32 foreign donors sampled, RACI noted that over 
50% funded programs aimed at environmental 
protection, economic development, and good 
governance.  Over 53% of foreign donors provided 
scholarships and fellowships, and 41% funded local 
education programs.  Over 40% of foreign donors 
funded human rights organizations.  Roughly a third 
of foreign donors fund programs that promote social 
inclusion, poverty reduction, and gender equality; 
and a quarter of them fund organizations focused on 
public health, citizen participation, cultural 
activities, youth, and research.  Third-tier 
priorities include indigenous communities, science 
and technology, children, nutrition, disabled, 
migration, and small business development. 
 
RACI: Local Donors Overwhelmingly Focus on Education 
------------------------------------- 
 
¶4. (SBU) Of the 22 local philanthropies sampled, 
RACI discovered that the overwhelming majority (77%) 
supported local education programs.  Roughly 20% 
supported cultural and public health programs.  Only 
1-2 organizations supported programs related to 
children, the environment, research, job search 
assistance, professional development, local 
development, rural development, journalism 
 
development, youth labor training, transportation 
security, the elderly, agricultural development. 
Although the study showed that international donor 
and local priorities differed significantly, Correa 
stressed that this did not mean the international 
donor community should shift its priorities to match 
local priorities more closely.  He argued that many 
local philanthropic organizations (LPO) shy away 
from funding programs that promote good governance 
and human rights, due to the perception that there 
may be political or economic repercussions for 
funding programs that may be critical of the GOA. 
Acknowledging that times are tough around the world, 
Correa urged greater cooperation between 
international and local donors to optimize limited 
development assistance. 
 
Lessons Learned from Argentina's 2001-02 Crisis 
--------------------------------------------- -- 
 
¶5. (SBU) Carlos March, Country Representative for 
the Swiss-based Avina Foundation, spoke on lessons 
learned from Argentina's economic crisis in 2001-02. 
He observed that Argentina's economic downturn 
sparked spontaneous and violent street protests 
against the perceived economic incompetence of the 
government and corruption among the ruling elite. 
The popular cry to "Get rid of them all!" ("Que se 
vayan todos!"), coupled with political and 
institutional weakness, forced four Presidents to 
resign in the span of two weeks.  According to 
March, the mobilized masses did not have an agenda, 
did not have any leaders in government through which 
they could channel their dissent, and cooperation 
between civil society groups was inexistent. 
Despite the political and social chaos that ensued, 
Argentina's democratic system stayed in tact, he 
said. 
 
¶6. (SBU) March then went on to compare Argentina's 
crisis with the current global economic crisis. 
First, he noted that the 2001-02 crisis was 
exclusive to Argentina, whereas today's crisis is a 
global crisis.  Prior to the crisis, Argentina was 
far more integrated within the international 
financial system and had broader access to 
international assistance.  Following its 2002 
default (at over US$ 80 billion, the largest 
sovereign default in world history) and still today, 
Argentina remains relatively isolated from 
international capital markets.  This makes it more 
difficult for Argentina to request stabilization 
packages and budgetary support from the 
international financial institutions.  Argentines 
know that it is only a matter of time before the 
global economic crisis significantly impacts the 
local economy.  During the 2001-02 crisis, the GOA 
ignored civil society.  Although more social 
activists have been included in executive and 
legislative positions, the GOA has succeeded in 
dividing civil society, he added. 
 
¶7. (SBU) March predicted that Argentina will be 
paralyzed for the first half of 2009 due to 
elections.  After June 2009, there will be great 
uncertainty and Argentina's weak macrofundamentals 
will likely exacerbate the local impact of the 
global crisis.  He indicated that Argentina's 
business sector has a limited capacity to weather 
the economic storm, and would likely stop 
outsourcing services; hold off on new investments; 
and lay off personnel.  By 2010, Argentina's economy 
will stop growing.  With less revenue coming in, the 
GOA will be forced to reduce public spending. 
Rising unemployment will strain the GOA's social 
welfare system, resulting in an increased demand for 
services offered by civil society organizations 
(CSOs).  The crisis, however, will have an adverse 
impact on CSOs as well, as their budgets shrink and 
CSOs are forced to down-size their staff.  Without 
adequate budgetary and organizational support, it 
will be extremely difficult for CSOs to meet the 
needs of those left out of the GOA social safety 
net. 
 
Poverty and Income Inequality Continue to Grow 
------------------------------------- 
 
¶8. (SBU) After the presentations, the Canadian 
 
Ambassador asked why Argentina requires increasing 
levels of international assistance when it has 
enjoyed high growth rates since 2003.  March 
explained that despite Argentina's economic growth, 
income inequality grew during that same timeframe. 
Demand for CSO services has not diminished since 
2001, which suggests the poor application of public 
policies, he asserted.  WB representatives chimed 
in, saying that the rolls for inclusion in the WB- 
financed GOA subsidy program for heads of households 
has been closed by the GOA since 2003, leaving many 
people who would otherwise qualify without access to 
this program.  (Comment:  The GOA has, in fact, 
created a number of additional social assistance 
programs to address growing poverty, including one 
for women with low employment prospects, Plan 
Familias, and another program that 
provides temporary subsidies to the non- 
working poor.)  Poverty is growing, they said, but 
the GOA has not yet developed new social assistance 
programs nor allocated budget resources to deal with 
the problem.  March added that few programs provide 
a cushion for the middle and working class.  He 
noted that the quality of healthcare and education 
is deteriorating.  Correa pointed out that while the 
middle class is steadily growing in Latin American 
countries such as Brazil, Mexico and Chile; in 
Argentina it is disappearing. 
 
IDB: People Need a Hand Up, Not a Handout 
----------------------------------------- 
 
¶9. (SBU) The IDB representative noted that the IDB 
finances healthcare, education and social 
development programs.  Although he stressed the need 
to fill the many gaps in Argentina's social safety 
net, he noted that it is very difficult for families 
to go off welfare once they are in the system, thus 
creating a handout culture.  In the IDB's view, 
greater attention needs to be given to job creation 
programs, he stated.  A WB representative observed 
that the economic crisis has had a moderate impact 
on the formal economy and a major impact on the 
informal economy.  Although layoffs have been 
minimal in the formal economy, businesses are not 
hiring new personnel.  In the informal economy, 
however, there have been massive layoffs.  It is 
easy to give money, but it is much harder to ensure 
that it goes to the right hands, he stated. 
 
¶10. (SBU) When Poloff asked whether international or 
local donors funded job training and labor 
reinsertion programs, an Italian Embassy 
representative noted that its Ministry of Labor 
(MOL) through the International Labor Organization 
provides technical assistance to Argentina's MOL to 
develop a network of provincial employment offices 
that provide job training.  The WB representative 
noted that the Spanish government was also financing 
a similar initiative. 
 
¶11. (SBU) As the discussion came to a close, the EU 
Ambassador acknowledged that Argentina's needs are 
many, but noted that most international donors focus 
on the poorest countries.  Even in the face of the 
current global economic crisis, it will be difficult 
to justify increasing assistance to middle-income 
countries such as Argentina, he said. 
 
Embassy NGO Fair 
---------------- 
 
¶12. (SBU) The Ambassador acknowledged that there are 
tough times ahead for everyone, but reiterated the 
USG's commitment to working with international and 
local partners to promote institutional 
strengthening, and social and economic progress in 
Argentina.  To that end, he announced that the U.S. 
Embassy, in collaboration with RACI and the American 
Chamber of Commerce (AmCham) would organize its 
second annual NGO Fair April 30 to bring together 
international donors, foundations, foreign 
embassies, and U.S. businesses to promote new 
philanthropic associations.  PAS gave a presentation 
on the fair and encouraged those present to attend 
and suggest local partners who could participate in 
the fair. 
 
Comment 
 
------- 
 
¶13. (SBU) The meeting served as an excellent forum 
to learn more about each donor's development 
assistance priorities and share lessons learned in 
working with community-based organizations in 
Argentina.  The discussion also helped identify new 
opportunities where we can work with international 
and local donors to optimize limited development 
assistance in the face of the global economic 
crisis.  Our efforts to use the meeting as a 
recruitment tool for our April 30 NGO fair proved 
successful, as many expressed interest in attending 
and recommended inviting additional NGOs with whom 
they have worked successfully. 
 
WAYNE