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UNCLAS BUENOS AIRES 000346 
 
SIPDIS 
 
SIPDIS 
HQ USSOUTHCOM FOR POLAD 
 
E.O. 12958: N/A 
TAGS: ELAB PGOV PINS ECON AR
SUBJECT: LABOR PROTEST TURNS VIOLENT IN PRESIDENT'S HOME 
PROVINCE 
REFTEL: (05) BA 2518 
 
¶1.  SUMMARY:  A two-week protest by dissident elements of the 
oil and gas workers union in President Nestor Kirchner's home 
province of Santa Cruz turned deadly on February 8 when a 
police officer was killed in the town of Las Heras, Santa Cruz 
and 15 others were wounded.  This is the first death in a 
social demonstration under President Kirchner, leading critics 
to call into question once again his administration's laissez- 
faire policy toward piquetero and union protests.  Three years 
of vigorous economic growth, rising inflation and a tightening 
labor market have fueled union demands for higher wages and 
lower taxes and would seem to presage a turbulent year in 
labor relations.  If, however, authorities are seen as 
responding effectively to the events in Las Heras, the public 
shock of the police officer's death at the hands of labor 
protesters could serve to temper more extreme negotiating 
tactics.  END SUMMARY. 
 
 
LOWER TAXES 
----------- 
 
¶2.  Following the February 6 arrest of a dissident union 
leader, a confrontation between oil and gas workers in Santa 
Cruz Province and provincial security forces turned violent, 
leaving one police officer dead and 15 others wounded.  Since 
January 23, dissident members of the provincial branch of the 
Private Oil and Gas Union had been blocking key roads to one 
of the San Jorge Basin's main oil fields.  The principal 
demand of the workers for Repsol-YPF, Vintage Oil (a small 
U.S.-owned oil firm soon to be taken over by U.S. Oil Company 
Occidental Petroleum) and Pan American Energy was that the 
government raise the floor for the taxable portion of their 
wages.  This is actually an issue being pushed at the national 
level by the CGT (General Confederation of Workers - 
Argentina's umbrella labor federation).  Since the peso 
devaluation in 2002, the government has not raised the floor 
at which salaries begin to be taxed.  The de facto effect in 
the relatively high-wage paying sectors such as the oil and 
gas industry is that many of their minimum wage earners, 
formerly exempt from paying taxes, have now been pushed above 
the taxation threshold.  The increased tax base has been one 
of the reasons for the treasury's burgeoning coffers and 
explains some of the government's reluctance to tamper with 
existing tax rates raise.  The Casa Rosada is further torn, 
cognizant of the unwanted stimulatory effect that increased 
disposable income would have on demand and inflation. 
(Comment:  Oil workers are among the highest paid workers in 
Argentina.  For example, the average salary for Santa Cruz oil 
workers is several times the average salary for Santa Cruz 
Province government workers.  End Comment.) 
 
WORKERS OR PROTESTERS? 
---------------------- 
 
¶3.  On February 6, provincial police acting on the orders of a 
local judge attempting to clear the area's roads of the two- 
week blockade, arrested the dissident faction leader Mario 
Navarro.  Upon learning of his arrest, some 700 fellow workers 
converged on the municipal building where Navarro was being 
held.  According to media reports, the protest escalated when 
protesters began to throw rocks and pieces of pavement at the 
building.  The police responded with tear gas and rubber 
bullets to repel the crowd.  Other versions of the story put 
the protesters on the defensive, saying they did not become 
aggressive until the police began to use the tear gas.  The 
deceased officer was killed by a blow to the head with an iron 
bar.  He did, however, receive a gunshot to the back and at 
least five othe officers also were wounded by gunfire.  The 
judge ordered Navarro released shortly after the incident. 
Both sides blame the other for initiating the violence, though 
no one denies that there were armed protesters present. 
Navarro blames "infiltrators" and says he advocates only 
peaceful protest. 
 
GOVERNMENT RESPONSE 
------------------- 
 
¶4.  Federal authorities were quick to respond.  President 
Kirchner sent 250 Gendarmeria officers to Santa Cruz under the 
supervision of the Secretary for Security.  The Gendarmeria, 
along with provincial security forces, have reopened and are 
 
 
protecting the highways that were blockaded for more than two 
weeks.  The investigation is under way, but the President and 
senior officials were quick to denounce the protesters' 
violence and voice their support for the police.  Conspiracy 
theories abound.  In a public event February 8, Kirchner said 
that he did not believe it a coincidence that the first death 
to occur at a civil protest during his presidency happened in 
his home province.  He accused "radical sectors" that were 
unable to gain support during elections of using social 
protests against the government as a last ditch effort to gain 
support.  Kirchner has said he blames in-fighting between 
various factions of the oil workers union and believes that 
provincial police acted appropriately.  He further stated that 
he supported the order that was given to the local police to 
not use lethal force. Critics say this left the police 
vulnerable and gave the protesters an opportunity. 
 
¶5.  Comment:  The death of the Santa Cruz police officer has 
shocked the country and has caused some to again question the 
Kirchner administration's overall approach to handling social 
protests.  Kirchner has received criticism for his perceived 
indulgence towards protesters and for doing little to resolve 
disruptive piqueteros, but he has been determined not to risk 
a repeat of violent protests that led to the premature ends of 
the presidencies of Fernando de la Rua in 2001 and Eduardo 
Duhalde in 2002.  This time, though, as Kirchner is quick to 
emphasize, the casualty was not a piquetero but a police 
officer.  In a year where labor relations and wage demands are 
predicted to be a major issue, especially in light of growing 
inflation, the violent events in Santa Cruz do not mark a very 
promising start.  If, however, the government is perceived as 
addressing the Santa Cruz issue quickly and effectively, the 
events could have the unintended effect of mitigating some of 
the more aggressive union tactics in the coming year. 
 
¶6.  Meanwhile, oil companies operating in the San Jorge Basin 
have lost tens of millions of dollars in lost revenues and the 
province has lost millions in retentions as a result of the 
workers' blockage of the oil fields.  This is part of a series 
of increasingly violent piquetero/government employee/oil 
worker protests that have occurred since President Kirchner 
took office (REFTEL).  The most recent previous protest was 
the seizure of the TERMAP oil tank farm and export facility in 
Caleta, Cordoba in October when a TERMAP security guard 
received permanent brain damage due to an ax blow to the head. 
Were it not for the high price of oil and the shortage of 
exploration/production opportunities elsewhere in the world, 
at least some of these oil companies would be looking for a 
friendlier place to invest.  End Comment 
 
To see more Buenos Aires reporting, visit our classified 
website at: http://www.state.sgov.gov/p/wha/buenosaires.< /a> 
 
GUTIERREZ