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UNCLAS SECTION 01 OF 02 BUENOS AIRES 000161 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
WHA FOR DAS PATRICK DUFFY, WHA/BSC AND WHA/EPSC, 
EB FOR TPP 
NSC FOR DAN FISK AND SUE CRONIN 
SOUTHCOM FOR POLAD AND J5 FOR JUAN RENTA 
USDOC FOR 4322/MAC/OLAC/BASTIAN/PEACHER 
USTR FOR MARY SULLIVAN AND KAREN LEZNY 
OPIC FOR RUTH ANN NICASTRI 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EINV PREL AR BL VE CI
SUBJECT: PRESIDENT KIRCHNER SUPPORTS URUGUAY'S RIGHT TO 
NEGOTIATE AN FTA WITH THE U.S. 
 
REF: MONTEVIDEO 66 
 
¶1.  (U)  This cable is sensitive but unclassified, not for 
Internet distribution. 
 
¶2.  (U)  President Nestor Kirchner made a statement to the 
press on January 19 during his state visit to Brasilia that 
he would not oppose Uruguay's negotiation of a free trade 
agreement with the U.S.  "If Argentina and Brazil cannot 
provide Uruguay with what Uruguay needs, it is not bad for 
them to sign a treaty with the United States," he said, "We 
do not want police states (that control other states).  I 
told Lula that we had to be flexible and he responded that he 
was in agreement."  "We are going to try to help Uruguay, but 
it may happen that we are not able to give it what it 
deserves," he continued, "We are not like Germany is for 
Europe, despite the differences.  We believe in MERCOSUR, but 
Argentina and Brazil are struggling to come out of a very 
deep economic crisis, and it may happen that we cannot give 
Uruguay the tools that its people need, so neither can we 
impede them from making a good deal."  Kirchner made the 
statement in a brief interview that he granted to the 
Argentine press in the lobby of the Hotel Kubitschek in 
Brasilia.  The journalists pointedly asked if MERCOSUR would 
prevent a member nation from negotiating outside the bloc. 
He responded that, "We have to be flexible.  MERCOSUR has to 
adopt to the needs.  We must understand, in addition, that 
balance is difficult.  This can be seen in the European 
Union, with the years of experience that they have with 
integration." 
 
¶3.  (U)  Kirchner also spoke about the advances in the 
MERCOSUR negotiations, the controversy with Uruguay over the 
construction of two European paper plants in Uruguay on the 
Uruguay River, the likely Brazilian concession regarding the 
application of safeguards within MERCOSUR, the future 
incorporation of Bolivia and Venezuela into MERCOSUR, and 
Chile's relationship with the same.  Regarding Chile, 
Kirchner said that Chilean President Elect Michelle Bachelet 
wanted to deepen relations with MERCOSUR.  Asked if that was 
possible even though Chile had an FTA with the U.S., Kirchner 
said, "Yes, we have to be flexible.  MERCOSUR has to be 
flexible."  Kirchner also stated that Lula had mentioned that 
Brazil and Argentina had coordinated the recent payment of 
their IMF debt. 
 
------- 
Comment 
------- 
 
¶4.  (SBU)  This is the first time that Kirchner has said that 
MERCOSUR member countries should have the right to pursue 
separate free trade agreements with other countries.  It is 
not clear why Kirchner said this, but there are several 
possible explanations.  First, Kirchner is a nationalist and 
he will do what he thinks is best for Argentina, such as 
imposing trade barriers on the import of Brazilian shoes, 
textiles, and household appliances, applying a zero tariff on 
the import of capital goods coming from outside of MERCOSUR, 
or demanding the introduction of legal safeguards into 
MERCOSUR rules to protect Argentine industries.  In this 
context, it is not surprising that he would sympathize with 
Uruguayan President Tabare Vasquez' efforts to pursue what is 
best for Uruguay.  Second, Kirchner has never allowed anyone 
to keep him from doing what he thought was best for 
Argentina, so he would be sympathetic to Tabare Vanquez doing 
what he thinks is best for Uruguay.  This sympathy is made 
 
BUENOS AIR 00000161  002 OF 002 
 
 
easier by the fact that Argentina has relatively little trade 
with Uruguay and has even less to lose as a result of an 
Uruguayan FTA with the U.S.  Third, Kirchner has argued that 
the benefits of MERCOSUR are not shared evenly among its 
members, i.e. that Brazil has received most of the benefits 
and needs to be more generous with its smaller partners.  If 
MERCOSUR has not been fair to a mid-sized country like 
Argentina, it stands to reason that it would be even less 
fair to a small country like Uruguay.  Fourth, Kirchner has 
been unable to respond to Uruguay's request for assistance in 
ending the paper plant-related blockade of bridges leading 
from Entre Rios Province to Uruguay.  Supporting Uruguay's 
negotiation of an FTA with the U.S. is a politically feasible 
way of supporting Tabare Vasquez without having to pay a 
domestic political price for telling Argentines that they 
cannot block the bridges to Uruguay.  End Comment. 
 
¶5.  (U) To see more Buenos Aires reporting, visit our 
classified 
website at:  http://www.state.sgov.gov/p/wha/buenosaires.< /a> 
GUTIERREZ