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C O N F I D E N T I A L BUENOS AIRES 000036 
 
SIPDIS 
 
SIPDIS 
 
FOR A/S TOM SHANNON FROM AMBASSADOR GUTIERREZ 
 
E.O. 12958: DECL: 01/04/2016 
TAGS: PGOV PREL ECON PARM AR SNAR
SUBJECT: ARGENTINA SCENE-SETTER FOR ASSISTANT SECRETARY 
SHANNON 
 
REF: A. 05 BUENOS AIRES 2345 
     ¶B. 05 BUENOS AIRES 1936 
 
Classified By: Ambassador Lino Gutierrez for Reasons 1.4 (B) and (D). 
 
¶1. (C) INTRODUCTION AND SUMMARY: On behalf of Embassy Buenos 
Aires, I warmly welcome your visit to Argentina January 
11-12.  Your visit comes at a critical time for Argentina's 
relations with its neighbors, especially Bolivia.  As a 
result of Kirchner's resounding victory in October 23 
legislative elections, Kirchner has tightened his already 
firm personal control of foreign, defense, and economic 
policy.  Argentina's interests in Bolivia are mostly focused 
on ensuring a steady supply of affordable gas and preventing 
increases in drug trafficking and illegal immigration. 
Kirchner's policy towards Bolivia occurs in the context of 
increasing economic ties with Chavez, but a fraying 
relationship with its other MERCOSUR partners.  END 
INTRODUCTION AND SUMMARY. 
 
 
Kirchner's Tightened Political Grip 
----------------------------------- 
 
¶2. (C) On November 28, the Casa Rosada named replacements for 
several key cabinet positions.  The most troubling nominee, 
given her history of pro-Chavez and pro-Castro statements, 
was former Ambassador to Venezuela Nilda Garre as the new 
Defense Minister.  A major surprise was the announcement of 
Banco Nacion President Felisa Miceli to replace Roberto 
Lavagna as Minister of the Economy.  Appointing Miceli placed 
economic policymaking firmly in the hands of Kirchner, who 
has proven to be an unpredictable economic policymaker. 
Deputy Foreign Minister Jorge Taiana, Kirchner's chief 
foreign policy advisor during the 2003 campaign, was tapped 
to be the new Foreign Minister.  Last August, Taiana told me 
and the DCM that Kirchner would continue to be very focused 
on domestic politics for the remaining two years of his term. 
 Taiana also cautioned us not to expect Kirchner to initiate 
a more active foreign policy in the wake of a big election 
win.  The cabinet changes do not alter our fundamental 
strategic interests in Argentina, but they will make it more 
difficult for us to pursue them. 
 
Regional Influence 
------------------ 
 
¶3. (C) Argentina has played a positive role in promoting 
human rights and democratic institutions in the hemisphere, 
particularly in Haiti and Bolivia.  Kirchner, with nothing to 
gain politically, decided in 2004 to deploy 575 peacekeeping 
troops in Haiti in support of MINUSTAH.  This decision 
reflected Argentina's traditionally strong support of UN 
peacekeeping operations worldwide (e.g. in Cyprus and Bosnia) 
and its specific commitment to Haiti.  By all accounts, 
Argentine peacekeepers have performed superbly in Haiti, and 
we expect the GOA to continue to renew MINUSTAH's mandate - 
unless Brazil or Chile pulls out. 
 
Bolivia 
------- 
 
¶4. (C) Although erratic on Bolivia at the beginning of his 
term, Kirchner was a strong supporter of constitutional 
democracy over the last several years.  Argentina sent a 
group of election observers to the December 18 Bolivian 
presidential election, headed by former Argentine Vice 
President and current Mercosur President, Carlos "Chacho" 
Alvarez.  In a December 22 meeting, Foreign Minister Taiana 
told me that Argentina's policy towards Bolivia mirrors the 
U.S. policy of constructively engaging the new GOB and 
steering them in a moderate direction. 
 
¶5. (C) Increasing natural gas availability is a top priority 
 
for the Kirchner administration.  Senior administration 
officials recognize that energy policy is critical to 
sustained economic growth (ref. A) and Planning Ministry 
officials have been in active discussions with their Bolivian 
counterparts to increase natural gas imports from Bolivia 
(ref. B). 
 
¶6. (C) President-elect Morales, expected visit on January 17 
represents an opportunity for Argentina to secure increased 
natural gas imports from Bolivia.  From 1971 to 1998 
Argentina spent more than USD 4 billion on Bolivian natural 
gas.  In 2003, the two countries signed a natural gas 
agreement under which Argentina currently imports nearly 4.5 
million cubic meters of natural gas daily.  (The Argentines 
would like to increase this to 7 million cubic meters per 
day.)  The development of the Northern Gas Pipeline (GNA) has 
the most long-term promise for strengthening that bilateral 
relationship and would bolster Bolivia's economic growth. 
 
¶7. (C) Energy firms and analysts believe that the GNA will 
cost approximately USD 1.5 billion and - once started - could 
be competed in two years.  The price, however, will be an 
issue.  Vice President-elect Linera said January 5 that the 
"solidarity price" for natural gas deliveries to Argentina no 
longer existed.  Linera announced that the incoming Morales 
administration intended to "negotiate a regional market price 
that fundamentally benefits Bolivia" during Morales' January 
17 visit to Argentina.  Potential investors in the GNA are 
concerned about political stability and an acceptable 
investment framework under Bolivia's Hydrocarbons Law. 
 
¶8. (C) Aside from maintaining a steady supply of affordable 
gas, Argentina has a strong interest in preventing an 
increase in the amount of illegal narcotics crossing its 
northern border, as well as a potential rise in illegal 
immigration in the event of political chaos.  Argentine 
border police (with DEA assistance) - in their largest 
seizure ever - recently captured a 738 kilo shipment of 
cocaine in the province of Salta.  Argentina has seen larger 
flows of cocaine and heroin across its northern border, bound 
for Europe, the United States, or simply Buenos Aires. 
 
Venezuela 
--------- 
 
¶9. (C) In Venezuela, President Kirchner played a constructive 
role in pressing Chavez to hold a recall referendum in 2004 
and met with the Venezuelan opposition on two occasions in 
¶2004.  More recently, Argentina has soughQstronger economic 
ties with Venezuela.  Kirchner met with Chavez in the 
Venezuelan city of Puerto Ordaz on November 21 during a trip 
that the GOA stressed was all about economics.  The 
presidents broke no new economic 
ground, however, and Kirchner's economy minister was absent 
from the delegation.  The meeting resulted in a declaration 
(the "Orinoco Declaration") to strengthen the countries' 
economic relationship, which is not naturally robust. 
Historically, Venezuela has absorbed less than one-half of 
one percent of Argentina's exports, while Argentina has been 
the destination of less than one-tenth of one percent of 
Venezuela's exports.  From Kirchner's perspective, the most 
important element of the trip was that Chavez agreed to 
continue Venezuela's purchases of Argentine bonds, which have 
totaled approximately USD 1 billion thus far in 2005. 
 
Comment 
------- 
 
¶10. (C) Although Kirchner may be ideologically sympathetic to 
Morales, he may soon find like minds do not always think 
alike.  Morales - who has already traveled to Caracas, Havana 
and is currently in Europe - only recently agreed to add 
Buenos Aires in a final stop January 17.  Vice-President 
elect Linera's announcement that the GOB intended to end its 
 
preferential gas price for Argentina was another indication 
that ideology will not carry this bilateral relationship very 
far.  The example of Uruguay is instructive.  After welcoming 
fellow leftist Tabare Vazquez's November 2004 election, 
Kirchner has found himself embroiled in a bilateral dispute 
over two paper mills on the Rio Plata, and now finds that a 
senior Uruguayan official is apparently keen on breaking 
MERCOSUR unity by negotiating a separate free-trade agreement 
with us. 
 
 
GUTIERREZ